Credit: (AP Photo/David Zalubowski)

Amid growing concerns about a potential recession, the latest economic reports for New Jersey show continued low unemployment, robust state revenue collections and other signs of strength.  

A long streak of consecutive months with private-sector job growth continued in October, and New Jersey’s unemployment rate remained well below where it was a year ago, according to the latest jobs report released by the state Department of Labor and Workforce Development.  

On the revenue side, total state tax collections were up by more than 7% in October compared to the same month last year, according to the state Department of Treasury’s latest monthly revenue report.  

In addition, for the first four months of the 2023 fiscal year, which began in July, total collections were up by more than 12% year-over-year, according to Treasury. 

But while many of the topline figures remain promising heading into the end of the calendar year, there are some signs that growth, at least in some sectors of the state economy, may be slowing. 

For example, Treasury’s latest revenue report showed a drop of nearly 20% in realty transfer-tax collections in New Jersey last month compared to October last year.  

Fears of recession 

That moderation comes as the Federal Reserve raised interest rates amid a period of high inflation that experts say has caused the real-estate market to cool and is also raising concerns about the potential for a national recession.   

In New Jersey, Treasury officials noted in the October revenue report that “median home prices have begun to decelerate.” And over the first four months of the fiscal year, realty transfer-tax collections are now “essentially flat” compared to the first four months of the last fiscal year, the officials said. 

But helping to push up overall state tax collections over the first four months of the fiscal year has been the income tax, which is the largest source of revenue supporting the state’s $50.7 billion annual budget.  

Solid growth in employer withholdings and strong final payments made by those who sought extensions for the 2021 tax year helped increase income-tax collections by more than 10% year-over-year through the end of October, according to Treasury.  

Meanwhile, collections from the sales tax, another major source of state revenue, were up year-over-year by more than 8% through the end of October. And revenues from the state Lottery, which help fund public-worker pensions in New Jersey, were up by more than 4% year-over-year through the end of October.   

Total collections 

In raw dollars, total collections from all major revenue sources were running more than $1.2 billion ahead of last year’s totals through the end of October compared to the same point in the last fiscal year, Treasury officials said.  

Still, it remains to be seen whether last year’s record-high totals for state tax collections can be matched by the time the current fiscal year closes at the end of June 2023. The official forecast from Treasury assumes a modest year-over-year reduction although overall collections are projected to remain relatively strong.  

“Revenue collections growth to date continues to be encouraging,” Treasury officials said in the latest report. 

“However, the October data may indicate that the expected moderation in collections growth has begun and could continue through the rest of [fiscal year] 2023, particularly during the spring tax filing season when last year’s historically high collection levels are unlikely to be repeated,” the officials said.

‘Although concerns are rising that a recession may be brewing, the national labor market has not shown any worrying signs, and the same is true for New Jersey.’ — Charles Steindel, economist

On the labor front, the state unemployment rate ticked up slightly in October, from 3.3% to 3.5%, according to the jobs report from the Department of Labor and Workforce Development.  

State labor officials chalked up the modest increase in the unemployment rate to more people “re-entering the labor force seeking employment.”    

Overall promise 

Moreover, the state’s 3.5% unemployment rate remained below the national unemployment rate for October, which was 3.7%. And at 3.5%, the state’s monthly unemployment rate in October was two full percentage points lower than the same month a year ago. 

Meanwhile, the state’s long run of adding private-sector job growth also continued last month, labor department officials said, pushing the total to 30 months of consecutive private-sector growth. That came even as some categories, including finance, recorded some modest job losses in October, according to the data.    

In all, the state’s average monthly jobs gain over the last three months was 7,200, despite an overall loss of 1,300 jobs in October. That reduction was fueled by a loss of public-sector employment that totaled 8,000 in October, outpacing the addition of 6,700 private-sector jobs, according to the data.  

Charles Steindel, a former chief economist at the Department of Treasury who analyzed the latest state job report for the Morristown-based Garden State Initiative think tank, noted the uptick in the unemployment rate came as the state’s overall labor force grew by 23,900. He said this amount was “unusually large.”   

“New Jersey’s labor market developments in October were positive overall,” Steindel said. “Although concerns are rising that a recession may be brewing, the national labor market has not shown any worrying signs, and the same is true for New Jersey.”