Unemployment remains anchored at 9.1%, according to official figures. State chief economist Charles Steindel interpreted the increase as a signal that employers are expecting increased consumer activity. But the right barometers to predict the consumption picture in 2011 are prevailing wages in different sectors, median family income, per-capita income, and the number of full-time workers in the state.
Those are among the main factors that can energize the state economy. Cheap credit and ever-increasing home equity were also factors prior to the recession. However home equity disappeared for the most cases when the housing market was inundated by a wave of foreclosures caused by the sub-prime crisis. Further depreciation occurred as homeowners lost their properties due to unemployment. With increased leverage of the typical New Jersey household and underwater mortgages, monetary policy by the Feds (low interest rates) has little positive effect on consumption. The situation is compounded by government inefficiency, size, state debt, and a very regressive tax policy in New Jersey.
This situation will not change much throughout 2012 and 2013 and the current Christie administration will not implement the necessary structural changes – nothing sort of a bloodless revolution – needed to set New Jersey on the right fiscal and economic path.