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First Quarter 2017: New Jersey Wealth Index

The RegentAtlantic New Jersey Wealth Index (RANJWI) is a proprietary index that measures the health of the wealth in New Jersey. RegentAtlantic developed the index which is based on four major components: Employment, Home Values, Personal Income, and Stock Performance. It can range from 0 to 100, with values above 50 indicating that the State has experienced an above average environment for wealth creation.

The RANJWI’s value for the first quarter of 2017 is 53. That indicates that the environment in the State has been close to average for wealth creation.

Q1 2017 New Jersey Wealth Index

Q1 2017 New Jersey Wealth Index componentsThe financial crisis and associated recession from 2007-2009 took the RANJWI to record lows. Falling home prices, a weak stock market, high unemployment and slow income growth created a very adverse environment for wealth creation. The index hit an all-time low in mid-2012 at a value of just 17. The recovery to 53 since then has been very rapid, and continued to broaden in 2016 with more indicators showing progress

The recovery in the health of New Jersey’s wealth was limited at first – it was mostly driven by a buoyant stock market, especially in the stock prices of some of New Jersey’s largest businesses, which include major pharmaceutical firms such as Johnson and Johnson and Merck. Starting in 2014 and continuing into 2017, other components of the index have become more supportive of wealth in the state.

The strongest positive development of recently has been an increase in the number of workers in the state. Since hitting a low point in early 2010, payrolls in NJ have increased by about 285,000. That represents a total 7% increase in the number of people working in NJ. As of March 2017, NJ employment is at an all time record high.

In the 12 months ending 12/31/2016, personal income in New Jersey grew about 3.4%. This is solid earnings growth that is ahead of the inflation rate. Unemployment has remained low in NJ and throughout the country, improving the potential for further earnings growth for the state’s workers.

Values for NJ homes have increased about 3.3% over the past year, which is a stronger showing than we’ve seen during much of the recovery. Overall home values are about unchanged from their levels in 2004 and New Jersey home prices continue to lag gains in the rest of the country. Home prices are one of the weakest links in the state’s economic conditions.

Important Disclosure Information

Please remember that different types of investments involve varying degrees of risk, including the loss of money invested. Past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by RegentAtlantic Capital, LLC (“RegentAtlantic”) will be profitable. Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request. This presentation is not a substitute for personalized advice from RegentAtlantic. This information is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.The Index was launched on June 30, 2013 with scores calculated and filled back to March 31, 1995. All Index calculations are based on twenty quarters (five years) of trailing data, so the earliest data in the March 31, 1995 score calculation is from March 31, 1990.

Source for the data for the Employment, Housing, Personal Income and NJ Stock Performance Scores: Bloomberg

RANJWI Authors

Christopher J. Cordaro

Christopher J. Cordaro

CFP®, CFA, MBA
Managing Partner and Chief Investment Officer
Andy Kapyrin

Andy Kapyrin

CFA
Partner and Director of Research

Trends to Watch:

  • Employment in New Jersey is improving rapidly. The state added 65,000 jobs in 2015, the best gain since 2012. This bring the total jobs added since the end of the recession to about 200,000. This helped to push NJ’s unemployment rate down to 5.1%, close to the national average.
  • New Jersey has lagged behind in the national home price recovery. Home prices around the country, as measured by the FHFA, rose 5.6% over the past year. New Jersey home prices are up only about 2.9%.
  • Personal Income grew 2.9%, beating inflation by a large margin, with potential to do better still as a result of falling prices for gasoline and growing wages.
  • The rapid drop in NJ’s unemployment rate and job growth of 65,000 in 2015 set the state up for a strong 2016 – continued growth in employment and a stronger job market are critical to growing the state’s wealth going forward.
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