After Hurricane Sandy devastated portions of New Jersey, many worry that the state’s economy will suffer and sink further below the level it has been at since the recession. While economist Joel Naroff says New Jersey’s economy will likely suffer in the short term, he told NJ Today Managing Editor Mike Schneider it will rebuild and could come back stronger than before.
The damage Hurricane Sandy brought on New Jersey is unmistakeable and will impact the economy, according to Naroff. “We’re likely to see the unemployment rate rise by maybe 1 percentage point or more. And in the short term, the devastation to the retail and hospitality sector is fairly great,” he said. “But once we get past that and start the rebuilding, I think the construction part is really going to take over.”
Naroff predicts that by the spring and summer, the state will see major activity that will boost the economy. He admitted, however, that some who lost jobs in hotels and restaurants may not get them back.
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Rebuilding will be financed in most cases by insurance companies in the private sector, according to Naroff, and a lot of businesses will be putting in their own money to rebuild. The government will also be heavily involved in the process. “This is when the government really is needed and the government does step in,” Naroff said. “So the state will find the money to do what it needs to even if it takes a little bit longer than some of us might hope for. I think the money will be there.”
Hurricane Sandy slowed New Jersey’s economic growth, according to Naroff. “The state’s been recovering, but recovering slowly. Job growth has been OK, actually fairly decent. But the unemployment rate has been way too high. And I think what we’ve seen is that the turnaround in the state is taking time and we should expect that. It’s a difficult situation and you can’t really fix things that have been going on for 20 years or more,” he said. “So the state is growing, but the economy is not expanding robustly and it’s probably lagging the nation as well and Sandy didn’t help.”
Naroff said many expenditures will have to be made in the near future to help New Jersey recover, but after that period he’s optimistic. “When I look towards the summer and the second half of next year, I think New Jersey’s economy will bounce back. I think the money will be there,” he said. “And while it makes it more difficult, it just changes the whole pattern of economic activity. If we do any rebuilding, if the restaurants and the roads all get done, then you’re going to see the state really pick up in growth.”
Naroff owns property in Margate, one of the areas hit hard by Hurricane Sandy. While he has seen devastation in the area, he believes the Jersey Shore area will return to a vibrant destination. While some businesses may not return, Naroff said others will take their place.
“I think that businesses will start coming back and as far as some of the communities are concerned, some of the older housing is going to be replaced by newer housing and that may even increase property values and help some of the cities and towns along the shore in the years to come,” Naroff said. “So there is some positives that could come from the storm.”
Atlantic City will likely also take a hit from Hurricane Sandy, but Naroff is optimistic for its future. “I think the Do AC campaign is starting to rev back up and I’ve heard it as the Can Do AC and I think that’s what really needs to be done,” he said. “I think people got the impression that the boardwalk doesn’t exist and I’ve ridden on it since the storm. And we need to really get the marketing back out there to let people know that AC’s open again and if that happens, it’ll bounce back.”