New Jersey loses jobs in October as it prepares for bond sale

Reuters News
Posted: Nov 20, 2014 2:34 PM

By Hilary Russ

(Reuters) - New Jersey's economy showed more cracks on Thursday as the U.S. state with the second-lowest credit rating in the country reported 4,500 jobs lost in October and an upward tick in its unemployment rate.

The latest bad news broke a streak of much-needed labor market improvement that had been slow but steady for the Garden State, and it came in advance of a planned $525 million state borrowing on Dec. 3.

The unemployment rate rose by 0.1 percentage point to 6.6 percent in October. More than half of the jobs lost were in the private sector, particularly in construction, preliminary data from the U.S. Bureau of Labor Statistics showed.

A spate of casino closures in Atlantic City, which has suffered from increased competition in nearby states, also weighed on the state in October, as they did in September, said New Jersey labor spokesman Brian Murray.

Accommodation and food service jobs declined by 2,200 jobs in October, due in part to the closure of the Trump Plaza, he said.

The state has now recovered only 48 percent of the jobs it lost during the 2007-2009 recession, far less than New York and nationwide, according to the left-leaning research group New Jersey Policy Perspective.

Wall Street credit rating agencies have downgraded the state eight times because of its poor economic recovery and large public pension shortfalls. Governor Chris Christie, a potential 2016 Republican presidential candidate, took controversial actions - not putting the money into the pension system that the state was supposed to contribute - in the middle of a budget crunch this year.

Christie has also repeatedly overestimated revenue projections and used onetime budget tactics, putting the state in hot water with rating agencies.

Enough's Enough
Walter E. Williams

New Jersey also has some unknown financial factors, including 14 Medicaid audits that could cost the state $407.5 million altogether. The state has disputed the findings and it is not clear when, if any, of the amounts would have to be paid back, according to bond documents.

Facing these financial headwinds, New Jersey plans to issue $525 million of general obligation bonds next month. Most of the proceeds will be used for capital projects at New Jersey's public and private colleges and universities to increase capacity.

It is a long time coming. Voters approved borrowing up to $750 million two years ago.

(Reporting by Hilary Russ; Editing by Jonathan Oatis)