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A year ago, historic inflation resulted in one of the most dismal outlooks from New Jersey businesses in recent memory.  

But NJBIA’s 65th annual Business Outlook Survey for 2024, released today, shows a leveling off from the overall negativity from New Jersey’s business community amid a slow retreat from record-setting inflation. 

Among the mixed bag of results this year were certain improvements in staffing challenges and how New Jersey compares to other states in multiple categories. But there was also a notable decline in sales and profits in 2023 and outlook for profits in 2024. 

“While it’s clear businesses are still struggling with inflation and the increased costs of running their operations, it does appear that last year represented a low water mark that we’re hopefully crawling out from,” said NJBIA President and CEO Michele Siekerka. 

“That’s not to say the 2024 outlook is positive overall. There are still many issues our job creators need to contend with, and newer concerns over rising energy costs and mandates. But if our policymakers can be more proactive in improving our business climate, we can move the needle even more in the right direction.” 

Following a similar pattern, the business outlooks on the national and New Jersey economy for the first six months of 2024 also were not positive. But they were less bleak than last year, when the 2023 forecast rivaled that of the Great Recession of 2008 and 2009. 

Inflation and Affordability 

2023 was a year in which Gov. Phil Murphy signaled he will let a 2.5% Corporate Business Surtax sunset on Jan. 1, 2024. He also signed impactful legislation that will greatly improve New Jersey’s tax treatment of foreign income. 

  • When asked if the governor and New Jersey lawmakers have done enough to address business affordability in the past 12 months, only 4% said yes, but 28% said they were unsure.  
  • 51% said they were substantially impacted by inflation for supplies and materials, compared to 65% who said the same last year. 
  • 40% said they were substantially impacted by inflation for labor costs this year, compared to 48% last year.  
  • 43% said they were substantially impacted by inflation for fuel costs, compared to 63% last year. 

Energy Costs and EVs 

The 2024 Business Outlook Survey found there were concerns about increased energy costs, both currently and in the future. 

Businesses did show a willingness to engage in electric vehicle usage for their operations. But stopped well short of supporting EV mandates. 

Among the findings: 

  • Of those, the top three bottom-line impacts of increased energy costs listed were: 
    • Made less profits (81%)
    • Increased prices for goods and services (74%) 
    • Reduced workforce costs (staff/compensation/benefits) (28%) 
    • Reduced usage of utilities (20%)  
    • Used lower-cost materials to produce final products (10%)  

“The lesson we can take here is EV usage will grow, as will its accompanying technologies,” Siekerka said. “But New Jersey should let the marketplace dictate that and avoid mandates that don’t allow for appropriate infrastructure or affordability in a too compressed timeframe.”  

Profits  

From 2012 to 2019, most New Jersey businesses reported more gains than losses in the NJBIA Business Outlook Survey. 

But that all changed during the pandemic year of 2020, and the climb from that hole continues as follows: 

“Small businesses face considerable headwinds when trying to make a profit,” Siekerka said. “This is why NJBIA uses a mantra to Trenton lawmakers that ‘every dollar counts’ when informing on policy.” 

Staffing  

    • Not enough candidates or applicants to fill open positions (76%) 
    • Candidates lacked the required skills or qualifications (67%) 
    • Unable to provide the requested compensation or benefits (34%) 
    • Faster-than-typical employee turnover (20%) 
    • Unable to provide requested hybrid/remote work arrangement (16%) 
    • Candidates lacked sufficient access to childcare services (8%) 
    • Greater-than-typical number of employee retirements (8%) 

Employment 

New Jersey businesses continued to see an incremental rebound in hiring levels in 2023. 

Wages  

Efforts by New Jersey employers to increase wages are continuing. 

  • Overall, 78% increased wages in 2023. 
  • 37% said they’ll raise wages between 3% and 4.9% in 2024.  
  • 78% said they’ll increase wages in 2024, while 22% anticipate no change in wages. 

NJ Competitive Levels 

This is typically an area of the survey where the state struggles. But there are a few bright spots and improvements to be found. 

  • 29% said the quality of New Jersey’s workforce was better than other states. That’s up 2 percentage points from last year and 8 percentage points from 2021. 
  • 24% said New Jersey is better at protecting the environment than other states. 
  • For the second straight year, 34% said New Jersey was a worse place to live than other states. In 2021, however, that number was 46%.  
  • 15% said the state does a better job in promoting economic development. That’s up from 11% last year. 
    • 83% said New Jersey was worse than other states for taxes and fees 
    • 67% said New Jersey was worse than other states in controlling government spending 
    • 63% said New Jersey was worse than other states in controlling health care costs 
    • 60% said New Jersey was worse than other states in controlling labor costs 
    • 57% said New Jersey was worse than other states for the cost of regulatory compliance 

“These are great areas for policymakers to focus on to make New Jersey more competitive and affordable,” Siekerka said. “These are the kitchen table areas for New Jersey businesses.” 

NJ’s Economic Climate and Challenges 

  • When asked about the current business conditions in their industry: 
    • 29% said they were experiencing a slowdown (5 percentage points more than last year) 
    • 17% said they were experiencing an expansion 
    • 10% said their industry was moving from a slowdown to a recovery 
    • 7% said they were moving from an expansion to a slowdown 
    • 37% said conditions in their industry were staying the same 
  • 21% said they had postponed installation of equipment or had expansion delays due to permitting or a regulatory process. 
  • For the third straight year, the overall cost of doing business was listed as the most troublesome problem for New Jersey businesses – with 24% listing it as tops among their Top 4. That was followed by: 
    • 16% for availability of skilled labor 
    • 14% for health insurance costs 
    • 14% for property taxes 
  • 78% of respondents said they expect their health benefits costs to go up in 2024. Of those, 22% anticipated those health benefit costs to rise 11% or more in 2023. 
  • 67% expected an increase in local property taxes, 31% expected them to remain the same, and only 1% expected a decrease. 

Economic Outlooks  

The economic outlooks for both New Jersey and the nation were very dismal a year ago. This year, the outlooks have improved, but are still negative overall.  

  • 28% ranked the state economy as good, compared to 25% in 2022 and 19% in 2021. 
  • Comparatively, only 16% said the U.S. economy would perform substantially or moderately better in the first half of next year. That’s a -31% net outlook for the national economy, which is actually an improvement from the -40% net outlook for 2023. 
  • That’s the second straight year of a net negative industry outlook. Prior to that, there hadn’t been a net negative in industry outlook since 2012.  

Sales 

  • Overall, that’s a +17% net positive. A year ago, that net positive outlook for sales was +31%.  

Purchases and Prices 

The slightly improved take on inflation in 2023 resulted in the reduction of price increases for the year. 

  • 61% said prices for their products and/or services increased in 2023 (10% increased substantially, 51% increased modestly). That’s compared to 70% who claimed an increase in products and services in 2022. Only 3% said they decreased prices this year.  
  • 37% are expecting to increase the dollar value of their purchases in 2024 and 20% are anticipating a decline. That’s a net positive of +17%, but 13 percentage points lower than the outlook for 2023. 
  • In 2023, 61% of businesses said they made investments in productivity. That continues a positive trend of 55% in 2022, 54% in 2021 and 50% in 2020, and just about matches the mark from the pre-pandemic years of 2019 (62%), 2018 (61%) and 2017 (60%). 

About the Survey: Questions for NJBIA’s 65th Annual Business Outlook Survey were sent to New Jersey business owners and executive staff in September and October 2023. The report is based on 503 valid responses. Most respondents were small businesses, with 61% employing 24 or fewer people. 

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