What’s the economic outlook for New Jersey for the rest of the year? Not so bright, according to a group of certified public accountants surveyed by the New Jersey Society of CPAs. And, not surprisingly, inflation was cited as the biggest challenge.
Nearly 65% of the 441 accountants surveyed said they expect the state’s economy to get worse for the second half of 2022. Even more, 68%, expect conditions across the U.S. to worsen.
The responses took a negative turn from last year, when 35% thought the state’s economy would improve and more than 40% of respondents said they believed the conditions in the U.S. would improve.
NJCPA also asked the group what the biggest challenge was facing their business. Their responses?
As for advice for their clients, of the nearly 240 respondents who work in public accounting, the majority (69%) said they had advised a client to consider moving out of the state because of the high cost of living here, while 54% advised a business client to consider relocating.
“About 20 years ago I obtained a Florida CPA license due to the migration that was heading south. It comforted my clients to know I had it,” one respondent said.
“CPAs tirelessly serve businesses and individuals throughout the state. Surveys like this give a great indication of what the business community thinks of the current environment for doing business and the potential for improvement,” Ralph Albert Thomas, CEO and executive director at the NJCPA, said in a statement.
The survey, which was sponsored by Investors Bank, a division of Citizens Bank, also asked accountants what they thought the government could do to turn the ship around in the next 12 months. They replied:
One respondent noted, “The government must make fighting inflation the biggest priority. If not, we will return to years of stagflation.”
Meanwhile, in Trenton, state leaders are debating how to spend nearly $11 billion in surplus tax revenue and unused federal COVID funds, with the goal of offering some relief to New Jerseyans. Democrats’ proposal would include property tax relief, while Senate Republicans have introduced their own plan: “Give It Back” rebates totaling $1,500 for most New Jersey families.
When it comes to consumers’ view on the economy, the Consumer Confidence Index dropped slightly in May, standing at 106.4, down from 108.6 in April.
However, Lynn Franco, senior director of economic indicators at The Conference Board, said in a statement that “[v]iews of current business conditions—which tend to move ahead of trends in jobs—improved. … That said, with the Expectations Index weakening further, consumers also do not foresee the economy picking up steam in the months ahead.”
Franco also noted that “purchasing intentions for cars, homes, major appliances, and more all cooled—likely a reflection of rising interest rates and consumers pivoting from big-ticket items to spending on services. Vacation plans have also softened due to rising prices.
“Indeed, inflation remains top of mind for consumers, with their inflation expectations in May virtually unchanged from April’s elevated levels. Looking ahead, expect surging prices and additional interest rate hikes to pose continued downside risks to consumer spending this year,” Franco said.