New Jersey economy expected to trail U.S. growth for next 2 years, Rutgers report says

Nearly all of New Jersey’s recent job gains came from the education and health services sectors

New Jersey’s economy is expected to grow at a sluggish pace over the next two years, trailing the nation as the state’s job market and population growth remain under pressure, according to a new Rutgers University report.

Released July 6 by the New Jersey State Policy Lab, the report said the Garden State closed out 2025 with solid growth in its gross domestic product, the total value of goods and services produced in the state.

But growth is expected to slow in 2026 and 2027, with the state’s economy expanding by just 0.9% each year, a full percentage point below the national growth rate, the study’s authors wrote.

The job market is also expected to weaken amid an anticipated hiring slowdown. Employment is projected to increase just 0.2% in 2026, compared with 0.5% last year, the report said.

Authors Will Irving and Tarun Arasu, both of Rutgers, expect employment growth to rebound to 0.5% in 2027 and eventually outpace the national rate over the medium term.

Nearly all of New Jersey’s recent job gains came from the education and health services sectors, which added nearly 30,000 jobs from April 2025 to April 2026.

“The rest of the labor market saw an aggregate decline of nearly 24,000 payroll jobs over the same period, with losses in nearly every supersector, including manufacturing, leisure and hospitality, construction, financial activities, and federal and local government employment,” Irving and Arasu wrote. “The medium- and longer-term outlook is more constructive, with service-providing industries expected to lead to a gradual broadening of growth across sectors.”

The authors expect New Jersey’s unemployment rate to hover around 5.2% for the next two years, nearly a full percentage point higher than the national rate.

The state’s demographic outlook further complicates the picture. New Jersey’s recent population growth has been buoyed by international migration, which is expected to slow sharply in the coming years.

“New Jersey’s Summer 2026 economic outlook presents a picture of tempered growth and a labor market that, while stabilizing, remains under pressure,” the authors wrote. “Tighter border enforcement, deportations, and restrictive immigration policy will weigh on in-migration, while the natural rate of population increase remains low by historical standards, a trend mirroring the national pattern.”

Nationally, the job market has remained surprisingly resilient in the face of tariffs, layoffs, energy price spikes, stubborn inflation, and wars overseas, adding an average of 114,000 payroll jobs a month through May, according to Moody’s.

But those gains have been concentrated in a narrow group of sectors, the Rutgers report said.

Job growth is expected to slow significantly by the end of the year, with monthly gains falling closer to 50,000 and the annual employment growth rate declining to 0.3% from 0.5% last year.

The New Jersey State Policy Lab is an independent research center run by the Bloustein School of Planning and Public Policy and the School of Public Affairs and Administration at Rutgers University.