The Week In Review
This week, Bloomberg reported: Homeowners with mortgages of more than $1 million are defaulting at almost twice the U.S. rate and some are turning to so-called short sales to unload properties as stock-market losses and pay cuts squeeze wealthy borrowers. (I need clarification on what is the rate of default as I have read it’s 1 in 5 American homes are at least 60 days behind on their mortgage payments and well, we’ve always called it short sales. Why should the rich be any different? Are you counting the same people twice? It should read pay cuts are squeezing wealthy homeowners, which is becoming more of an oxymoron since wealthy and homeowner should not be in the same sentence considering 1 in 4 American homes secured by a mortgage have outstanding balances that exceeds the fair market value of the properties they are attached to. This is nothing new since we know/knew home prices where inflated from 2003-2006. Same dismal housing picture even for wealthier Americans). Maybe this is a case of trickle up economics?)
From NorthJersey.com: New Jersey lost 9,400 jobs in November in sharp contrast to the modest job gains the month before, and the state unemployment rate stayed at 9.7 percent, figures released today show. Slower than expected holiday season hiring by retailers contributed to a loss of 9,400 New Jersey jobs in November, state figures released Wednesday showed, suggesting the state’s economic woes are far from over. The state has now lost 88,900 jobs this year, about the same as in all of 2008, according to the monthly jobs report released by the New Jersey Department of Labor and Workforce Development.
The report contained some bright spots. The state unemployment rate remained at 9.7 percent for the second month in a row, below the national rate of 10 percent. State officials also revised the loss of 1,800 jobs in October to a gain of 1,200 jobs. But November’s loss was higher than the monthly average job loss of about 8,000. And it would have been worse but for the addition of 1,500 government workers. The state lost 10,900 private sector positions. (Well, we are below the national average for unemployment by decimal points in part due to 1 step forward, three steps backwards; one step forward, three steps backwards. Did I just read that the government was hiring with tax dollars? Stop cha-chaing with my tax money! Whatever happened to businesses hiring? We wil get to that is the next paragraph)
From PressofAtlanticCity.com, In the Small Business Survival Index 2009, released this month by the Small Business & Entrepreneurship Council, New Jersey again ranks 50th – worst among the states. Only the District of Columbia has worse conditions for small businesses, thanks mainly to its very high crime rate and exceptional number of government employees. The Index considered 36 major government-imposed or government-related costs to small businesses and entrepreneurs. New Jersey ran into problems in the usual places, namely taxes, taxes and taxes.
SBE Council chief economist Raymond J. Keating, author of the study, found New Jersey has:
- The third highest property tax burden at 5 percent of personal income
- The second highest individual capital gains tax with a top rate of 10.75 percent
- The sixth highest corporate capital gains tax with a top rate of 9.36 percent
- The fifth highest corporate income tax with a top rate of 9.36 percent
Why would anyone want to live this is State? Well, the PressofAtlanticCity goes on to say:
The tax news isn’t all bad.
- New Jersey has the 12th lowest combination of sales, gross receipts and excise taxes, which together cost 2.7 percent of average personal income in the state, the SBE Council found.
- Unemployment taxes ranked 35th in the nation (but proposals are already being floated in Trenton to jack them up to cover the hole left by many past diversions of the money for spending other than on unemployment benefits).
- And our gas tax is the envy of the rest of the heavily populated states, the third lowest in the nation at 14.5 cents a gallon. No wonder some Trenton officials consider it a candidate for new revenue.
- Unlike the Tax Foundation’s annual study, the SBE’s includes some non-monetary factors in its rankings.
- Crime, for example, is an area where New Jersey does pretty well, ranking seventh among states with a crime rate of 2.62 per 100 residents, based on FBI data. In last place District of Columbia, it’s more than double here with 6.5 per 100.
- New Jersey does surprisingly less badly than expected with 5.9 government employees for each 100 residents, ranking 35th.
- But add it all up and our state is still stuck at the bottom on the things that matter most during tough economic times.
The best states in the Small Business Survival Index this year were South Dakota, Nevada, Texas, Wyoming and Washington. Eastern states in the Top 10 included South Carolina and Virginia. Just above New Jersey at the bottom were California, New York, Vermont, Maine, Rhode Island and Massachusetts. Gov.-elect Chris Christie repeatedly has promised not to raise taxes, raising the prospect that perhaps New Jersey can get off the floor of these business-and-taxes rankings. (Hmm, if businesses can’t make money here, why would people get hired? Although, there is one reason why the housing market hasn’t quite bottomed-out just yet and prices are stable in some areas. New Jersey residents rely on other job markets equally: primarily New York, Philadelphia and seasonal employment opportunities i.e. the Jersey shore. Thank god for good state placement on the map or we would really be in a heap of Sugar Honey Ice Tea.)
Last, but not least, from NJ.com, reported a new homebuyer rebate! Soon Realtors could be paying you. It’s illegal right now, but pending legislation would allow realtors and real estate brokers to pay home-buyers a portion of their commissions at the close of a deal. New Jersey is one of 11 states that don’t allow the incentive, said Sen. Nicholas P. Scutari (D-Union), one of the bill’s sponsors. It would be up to the individual real estate agent to decide whether to pay the client. “We’re trying to help the real estate market and to allow real estate agents and brokers to make deals happen,” Scutari said. The bill (S139/A373) cleared the Senate Commerce Committee. It has passed the Assembly and now goes to the full Senate for consideration. (Interesting! Last week, Business week insulted buyers with it’s You’re either Stupid or Broker To Not Buy a House Now, or Both article and now we’re thinking of paying buyers from our pockets to buy houses. Well, at least now we won’t have to take it from the seller or the attorney or Realtor at closing when a deal was short. Now we/I can willing give my money away-Wait, Wait, did my operating fees just go up? You’re telling me now I have to pay buyers to work with me? Oh Boy!).
Not a good week to be a New Jerseyian overall, but nothing new. We already know we have high taxes and businesses find it hard to make money in New Jersey. So, why stay here: the food is great; our family lives here; good shopping; you’re never too far away from a large city; we have a healthy nightlife and there is always opportunities in every market!
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