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Focus NJ: Unemployment Rising

New Jersey’s unemployment rate reached its lowest level on record in August 2022 (3.0%). In the months since, that rate has steadily climbed, taking the Garden State from the national average to the top five highest unemployment rates in the country.

As of August 2023, the most recent data available, New Jersey’s unemployment rate of 4.2% was surpassed only by Nevada (5.4%), the District of Columbia (5.0%), and California (4.6%). In the past 12 months, no state has seen as large an increase in its unemployment rate as New Jersey.

Throughout 2021 and much of 2022, New Jersey’s unemployment rate surpassed the national average, but that trend reversed in June 2022 when the state saw its rate fall below the rest of the country for the first time in over a year. New Jersey’s rate has now surpassed the national rate for three consecutive months.

New weekly unemployment claims, a measure of the number of workers filing for unemployment benefits for the first time, were approximately 10% higher for the week ending Sept. 17, 2023, than they were one year earlier, and the number of continuing claims has increased approximately 31% over the same span. Both figures, however, remain well below levels seen in 2020 and 2021.

While the trajectory of New Jersey’s unemployment statistics may be cause for concern, the state’s other economic indicators paint a more complicated picture.

New Jersey’s total labor force, which includes those working and those actively looking for work, has steadily climbed throughout the year. As of August, New Jersey’s labor force included 4.88 million residents, compared to 4.75 million prior to the pandemic in February 2020. Similarly, the labor force participation rate (65.5%), which measures the percentage of working-age individuals actively engaged in the labor force, has also surpassed pre-pandemic levels.

Overall, New Jersey’s recent trend of increasing unemployment warrants attention given the uncertainty still present in the national economic environment. A much-prognosticated recession has yet to manifest, but it continues to loom in the consciousness of the public and economic experts alike, and the Federal Reserve’s fight against inflation is ongoing. In totality, however, there are still plenty of positives inherent in New Jersey’s economy to provide some offsetting optimism.

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