With the 47th U.S. president, Donald Trump, set to take office and a New Jersey gubernatorial election looming this year, rest assured there will be changes affecting our economy here in New Jersey in 2025. From immigration and housing, to gas and grocery prices, we will not know the effect until it happens. The national threat of tariffs will most definitely impact our state’s economy where there are over 20,000 companies involved in exporting. However, with the new leadership in Washington, we could and should see more favorable tax policies for businesses.
Predicting our local economy involves considering several key factors, including national trends, state-specific economic policies, and broader global conditions. In our state, economic growth is likely to continue its post-pandemic recovery, supported by industries like pharmaceuticals, biotechnology, healthcare, and finance. These sectors are projected to remain strong, especially with New Jersey being a hub for these industries.
REAL ESTATE
In real estate, the housing market could see moderate growth, however, housing affordability will remain a challenge. New Jersey’s municipalities are currently contemplating the impact of having to come up with a Housing Element and Fair Share Housing Plan by June 30th this year. Using the numbers released by the state in 2024, Mercer County municipalities would be required to rehabilitate a total of 1,800 currently existing affordable units county wide, plus build 3,500 new units. Given that usually market rate housing is built to support the affordable units this could mean that thousands of new homes need to be built to meet those numbers. Certainly, housing is a big contributor to our local economy what with labor, lumber, supplies, and equipment.
UNEMPLOYMENT
Unemployment rates are expected to remain stable and low, although we may face shortages in certain sectors. With our states focus on clean energy there could be a boost in jobs related to renewable energy and infrastructure improvements.
BUDGET
Governor Phil Murphy delivered his 2025 State of the State Address in the Assembly Chamber at the New Jersey State House January 14, 2025 (too late for this publication) and as of this posting his office released this statement:
“Over the past seven years, we have built a state that is stronger, fairer, and more prepared to face the future,” said Governor Murphy. “But our job is far from over. As we begin our final year of partnership, we remain more committed than ever to delivering economic security and opportunity to every New Jerseyan. And over the next 12 months, we are going to run through the tape in making New Jersey the best state—anywhere in America—to live, work, and raise a family.”
There will undoubtedly be budget challenges for New Jersey in 2025 and hopefully there will be fiscal responsibility, especially with the governor’s election happening this year. The new governor must deliver stability in their public policy initiatives as much of the new spending in the budget is not sustainable, and we should be hearing some good ideas to do so from the gubernatorial candidates. We have used $2.4 billion from New Jersey’s budget surplus, not a desirable move. The increase in the corporate business tax to 11.5% has placed us in an uncompetitive position making it harder to attract new business to New Jersey. This rate is the highest in the country and hopefully this unenviable position will receive sorely needed attention in 2025.
We cross our fingers that inflation rates will stabilize in 2025 as higher interest rates can and will affect consumer spending and the housing and auto markets, thus affect our economy.
IMMIGRATION
Immigration is a topic we all have our eyes on. How will the president’s stance on immigrants and H-1B workers affect New Jersey? The fact is that there are nearly 5,000 companies in New Jersey who are sponsoring H-1B visas. This is most likely due-to-the-fact that many students in New Jersey are graduating without STEM degrees causing our companies to hire outside the country to remain relevant and stay competitive. In addition, many businesses may be relying on the legal immigration workforce to survive, which may also see an impact.
COUNTY GOVERNANCE
For 2024 Mercer County elected a new County Executive, Dan Benson, with a vision toward economic development and we should see local infrastructure projects such as his $25 million investment in our Trenton Thunder Ball Park, along with an active search for a new minor league team, MCIA funding for a new Hamilton Township Municipal and School Administration Building, expansion of the Trenton Mercer Airport, etc. All creating jobs and infusing dollars into our economy. In addition, he has a laser focus on tourism and its positive affect on our economy, especially with the sesquicentennial (250th anniversary) of our country looming and the fact that we are the crossroads of the revolution. Washington’s crossing the Delaware, and the Battles of Trenton and Princeton alone will bring in thousands of visitors in the next several years, a boon to our hotels, restaurants, and local businesses.
SMALL BUSINESS
When we think about our local mom and pops and independent businesses there is concern about the new administrations mass deportation and tariffs. Immigrants are predominately working for small businesses who are still dealing with problems that emerged over the last few years: skilled labor shortages, supply chain issues, high costs thanks to inflation, and shrinking profit margins. Prices are still high and with the promise that on day one of the administration to impose tariffs on Canada, Mexico and China, there is valid concern of retribution and increased pricing on imports from these three countries. Mexico alone supplies almost 40% of all fruits and vegetables consumed in the U.S.
NEW COLLABORATIONS
The other exciting initiative is the collaboration between the Governor’s Office, Economic Development Authority and Princeton University to create an AI Hub for the state. The AI Hub, will bring together industry leaders, researchers, and start-up companies to advance research and development in the emerging field of artificial intelligence. The hub will promote workforce development to support new AI technology development and implementation. Additionally, the AI Hub will house dedicated accelerator space and work to advance the use of ethical AI for positive societal impact. With all those like minds coming together, 2025 should see some innovative initiatives and attract new technology, all helping our economic engine.
ENTERING 2025
To summarize, there is no crystal ball to predict what the economy will look like or how it will react to the positive and negative issues mentioned here, however now more than ever, national, and international actions will have more impact on New Jersey, hopefully more positive than negative.
Thankfully, NJ tax prices still fall below the national average. That being said, if you are planning to travel out of state, to New York or Pennsylvania, NJ gas is cheaper even with the increased gas tax. So, fill up before you travel!
Hal English is currently President and CEO of the Princeton Mercer Regional Chamber of Commerce, representing over 1,000 area businesses. Prior to that, Hal was a commercial and retail banker and responsible for business banking throughout Mercer County.