The economy in 2025 is mixed?

Business

By Anthony Birritti, Editor-in-Chief on December 4, 2024

The 2025 economic outlook is mixed for New Jersey businesses, which under a new Trump administration may see growth from deregulation of certain industries while being negatively impacted by tariffs on foreign imports and a crackdown on immigration.

Additionally, New Jersey’s financial outlook, with a structural deficit of more than $4.5 billion, coupled with high property taxes, a high income tax rate and the highest corporate tax in the country, will also pose a challenge for businesses unless the state ensures stability in its political initiatives.

These and other topics were presented today to a business audience of more than 220 during an economic fireside chat at the New Jersey Business & Industry Association’s annual Public Policy Forum, held today at the APA Hotel Woodbridge.

Michele Siekerka, president and CEO of NJBIA, moderated the discussion, which included Andrew Sidamon-Eristoff, a former state treasurer and now owner of ASE Tax Policy and Administration, LLC, and Mark Lehman, CEO of Citizens JMP Securities and president of Citizens in California , participated.

Asked by Siekerka what his overall assessment was for the country’s economy next year, Lehman said 2025 would “start off with flying colors.” This is due to “great” economic growth over the past four years as the country emerged from the COVID-19 pandemic and businesses benefited from the Tax Cut & Jobs Act and the Build Back Better program, which includes the American Rescue Plan belonged.

Lehman said the stock market has performed well over the past four years and there has been a lot of euphoria on Wall Street over the past four weeks. He is optimistic for 2025, but warns: “There is always something lurking around the corner.” I fear we are getting a little too euphoric.”

The Trump Effect

Lehman said there would be sweeping changes under the new Trump administration, particularly when it comes to tariffs on foreign countries.

Sidamon-Eristoff said these tariffs will particularly impact New Jersey’s 20,000 exporting companies and the 1.2 million jobs here tied to international trade. “That’s one in five jobs, so any discussion about tariffs is very serious,” he said.

He added that he was not sure whether the Trump administration would implement all of the president-elect’s tariff proposals and policies, pointing to Trump’s last administration when tens of thousands of individual tariff exemptions were granted to companies.

Meanwhile, Lehman said he doesn’t believe the administration will deport millions upon millions of illegal immigrants, as the new president is demanding.

“There will definitely be some communities that will be disproportionately affected, with some retaliatory scenarios from the administration. However, I think there will not be a whole complex of foreign worker exodus… the numbers are too frightening,” Lehman said, reiterating that it will have some “profound impact… because voters want it.” Trump has did a very good job of making that clear to people.”

Tax Issues in New Jersey

Looking at New Jersey’s budget problems, Sidamon-Eristoff said much of the new spending in the state’s $56.7 billion fiscal year 2025 budget is unsustainable. According to Sidamon-Eristoff, the state has withdrawn about $2.4 billion from its budget surplus, while the structural deficit is over $4.5 billion. The Stay NJ property tax relief program for seniors alone will require a $1.3 billion increase in funding over the next few fiscal years, he said.

He called Gov. Phil Murphy’s demand for every state department to stop hiring and find 5% in budget savings merely “window dressing” and that the next governor must address all financial issues.

When asked by Siekerka what the state can do to be more tax-friendly, Sidamon-Eristoff said an important solution is to create stability in public policy, be it taxes, spending or regulation. In addition, he said that the corporate tax increase is a prime example of how to mishandle state tax policy. “It has exposed New Jersey as an unreliable political partner to the business community. It signaled to the rest of the country, if not the world, that New Jersey was less competitive,” he said.

Sidamon-Eristoff further addressed the dilemma of high taxes at both the state and local levels, saying it is a cultural issue in New Jersey that needs to be addressed inside and outside of government.

For more business news, visit NJB News Now.

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