TRENTON - Two of New Jersey's leading economic experts painted a grim picture of the state and national economies yesterday, saying New Jersey could lose 246,000 more jobs before financial conditions improve.
Using prior recessions to forecast the impact of the current downturn, James W. Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University, told a state Senate budget panel that the slump was likely to continue at least through March 2010 and might last until February 2011.
He projected future job losses at from 67,000 to 246,000, in addition to those lost through September, he said.
"Economic wild parties are often followed by prolonged economic hangovers," Hughes said. "We are now in the early hangover stage. Correcting all of Wall Street's excesses will take a considerable amount of time."
Hughes, a nationally recognized expert on demographics, housing and regional economics, was among those invited by State Sen. Barbara Buono (D., Middlesex) to testify yesterday as the Senate Budget Committee sought information on the extent of the recession and its effect on residents, businesses, and the state's bottom line.
The hearing followed Gov. Corzine's address to the Legislature on Thursday, during which he proposed a stimulus package that included help for homeowners facing foreclosure, loans to banks to ease the credit crunch, and a hiring incentive for businesses. The Assembly held a day of hearings on the economy on Oct. 6, advancing 19 bills to aid residents and businesses.
"This is sobering testimony," Buono said after Hughes spoke of future job losses and falling housing prices. His colleague at Bloustein, Joseph Seneca, testified about how much tax revenue the state could lose.
Though New Jersey housing prices have fallen, Hughes said, the state's housing market has not hit bottom. "We're only about halfway there," he said.
One reason for the prolonged decline, he said, is that New Jersey housing prices rose 135 percent between 1998 and 2006, far outpacing a rise in income, and far ahead of the 85 percent rise in housing prices nationally.
"State tax revenues are highly exposed," said Seneca. "There will be further shortfalls despite the very conservative revenue forecast made last spring."
A report out Friday showed that New Jersey's tax-revenue collections fell about $77 million short of projections in September. The Treasury Department also reported that the $1.3 billion generated from income-tax returns was $42 million less than expected.
Seneca urged the state to brace for difficult times, saying consumer confidence has been severely shaken. He said 2008 likely will deliver the first decline in consumer spending since 1991.
"The engine of consumer spending has finally stalled," he said.
That, in turn, has an impact on state revenues. For example, Seneca said, 14 percent of the state's sales-tax revenue comes from new-vehicle sales. Such purchases are down 12 percent in 2008 from the same period last year.
State Sen. Steve Oroho (R., Hunterdon), a member of the budget panel, called for a "bottom-up review" of state spending.
"In this economic climate, the state will be forced to make some very difficult decisions for the upcoming budget cycle," Oroho said.