Governor Murphy warns business leaders about recession

Gov. Phil Murphy told South Jersey business leaders Wednesday that his administration expects the state is poised to enter a recession, though he said he believes the downturn will be far milder than that caused by the 2008 subprime mortgage crisis.

“I’m in the camp of a shallow — real but significant — but shallow, fairly short-lived recession, and part of the reason I believe that is because there’s a tremendous amount of liquidity on the margins,” Murphy said during the South Jersey Chamber of Commerce’s annual luncheon.

Murphy suggested that $1.4 billion in unspent U.S. bailouts and a $6.8 billion state surplus — combined with billions more in federal aid the state is slated to receive under the bipartisan infrastructure bill, the CHIPS Act and the Inflation Reduction Act — helped Garden State recover quickly.

New Jersey’s economy recovered more slowly than most other states’ economies after the Great Recession, with some of the effects lingering a decade after the crisis.

The state has enjoyed rising revenues since emerging from the pandemic, but Finance Ministry officials have warned that they expect tax collections to moderate in the current fiscal year. The first signs of this moderation have already appeared.

Collections from New Jersey’s main revenue sources — they include state sales, income and business taxes — rose just 0.5% in November compared to the same month last year.

Officials from the Treasury Department and the Office of Legislative Services said sales tax collections in November exceeded those of the previous year only because November 2021 had one more Wednesday than November 2020, meaning employers made additional withholding.

Overall, management expects revenue for fiscal 2023 to decline by 3.2% compared to the previous fiscal year. Treasury officials are expected to release revenue data for December this week.

Rising inflation, weakened consumer spending and rising interest rates have led economists to believe a recession is likely this year for months. Last month, a Bloomberg poll of economists put the probability of a recession in 2023 at 70%.

But more recently, positive signs have led some economists to say the nation is headed for a so-called soft landing, meaning the economy is slowing but not heading into recession.


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