Despite New Jersey being the second worst-hit state by the COVID-19 pandemic and an epicenter when the virus struck in mid-March, the state’s gross domestic product avoided some of the worst economic havoc during the first quarter of 2020.
That’s according to Tuesday data from the U.S. Bureau of Economic Analysis, which showed that New Jersey’s GDP shrank by 5.5 percent between January and March, compared to the national average of 5 percent.
The economies of all 50 states shrank during the first quarter, just as the pandemic was taking hold across the country.
New York and New Jersey were both the epicenters in March and April, with New York having seen 222,000 positive cases and nearly 23,000 fatalities, while the Garden State had nearly 174,000 cases and over 13,000 deaths from the virus.
GARDEN STATE INITIATIVE –
But New York’s GDP shrank by 8.2 percent, as did Nevada, which saw much of its gambling, tourism and hospitality industries situated in Las Vegas and Reno dry up.
Louisiana, where the oil and gas refineries which fed an industry that imploded as hundreds of millions of Americans stopped traveling and buying fuel for cars and airplanes, took a 6.6 percent hit to its GDP. Tennessee and Rhode Island both took a 6.2 percent hit.
Brandon McKoy, president, New Jersey Policy Perspective. – NJPP
“The entire country was 5 percent, so for New Jersey to be a little bit worse than that when it was the epicenter of the coronavirus crisis… it seems like New Jersey did comparatively okay,” said Brandon McKoy, president of the progressive think tank New Jersey Policy Perspective.
That is not to say the state’s economy has not taken painful hits. New Jersey’s unemployment hit a record 16.3 percent in April, the height of the pandemic for the state and New Jersey’s highest jobless rate since the federal government began tracking state-by-state data in 1976.
Many businesses were ordered to shut their doors or scale back operations, in a bid to cut down on the in-person contact that might provide the virus with new hosts.
Others have simply seen a steep drop in patronage, be it because of the stay-at-home order, or people themselves cutting back spending as they find themselves without work. Roughly 1.3 million New Jerseyans are collecting jobless benefits.
Much of the southern and southwestern United States fared much better than the national GDP average during the first quarter.
“They defied the shutdown,” Charles Steindel, the state’s chief economist between 2010 and 2014 under then-Gov. Chris Christie and at the height of the Great Recession, said in a phone interview.
Steindel crunched the data for the conservative-leaning think-tank Garden State Initiative, and said in their analysis that New York’s nosedive stemmed “a collapse in finance and construction.”
Though the full force of the pandemic’s impact on the national and state economies might not be evident until data comes out later this year for the second quarter, which runs April through June.
Those states have experienced dramatic surges in the virus in recent weeks, while the Northeast has seen cases creep back up.
That’s prompted mass business closures in states such as Texas, and the Florida tourism destination of Miami, and it’s prompted Murphy to halt New Jersey’s reopening plans. Texas and Florida GDP’s shrank by 2.5 percent and 4.9 percent respectively.
“I don’t think people are going to repeat the massive shutdowns,” Steindel said. “Most people are thinking probably you can calibrate it a bit better and get the same results.”
“You don’t close all the factories, whereas in the spring we had the factories closed,” if certain businesses like bars and restaurants could instead be shut down. “They’re not going to be at the same intensity.”
Meanwhile, the sudden lack of business meant billions of dollars in state tax revenue that evaporated over the course of several weeks, forcing drastic budget cuts for the next year to the state’s social service and health programs.
And on June 30, Murphy signed a $7.6 billion “bare bones” emergency budget to cover expenses through Sept. 30, which is the end of the three-month extension for the current fiscal year.
Oct. 1 is the start of the 2021 fiscal year, which runs through June 30, 2021, and would require lawmakers and the administration to slash billions of dollars.
Editor’s Note: This article was updated on July 8, 2020, at 2:35 p.m. EST to add reference and link to the Garden State Initiatives data and report.
