newjerseynewsroom.com

And 37 percent worry they could lose their jobs

BY TOM HESTER SR.

NEWJERSEYNEWSROOM.COM

New Jerseyans’ are feeling distinctly worse off financially and their outlook on the housing market has soured, according to a quarterly consumer survey by Fairleigh Dickinson University’s College of Business made public Monday.

A majority of New Jerseyans (51 percent) say they are worse off financially than they were a year ago, a six-point increase since April. About a quarter (26 percent) say they are about the same as a year ago, and about a quarter (23 percent) say they are better off.

Adding to consumers’ anxiety is the prospect of losing a job: 37 percent of workers say they are somewhat or very concerned with losing their job in the next 12 months. That figure is up 5 percent from April and up 7 percent since January. Workers in households making less than $50,000 per year are most worried about the possibility of losing their job, with 46 percent saying they are somewhat or very concerned. More than three in five of all adults (63 percent) continue to report that relatives or friends have lost a job in the past year.

People who own their house are more likely than renters to say they are worse off financially (53 to 42 percent), and much less likely than renters to say they are better off (19 to 35 percent). Looking at the year ahead, 38 percent say their financial well being will improve, while half (49 percent) think they will be the same or worse off.

One reason for consumers’ grim outlook is housing prices. Half (49 percent) say they expect housing prices in their area to go down in the next 12 months. That is a huge turnaround from just six months ago when half (49 percent) said they expected housing prices to rise, and only 30 percent said they thought housing would decline.

“If your house is a key component of your wealth and it goes down in value with no sign of improvement, you will have a bleak view of your financial future,” Sorin Tuluca, a professor of finance at FDU’s Silberman College of Business, said.

Moreover, one in five homeowners (19 percent) say their mortgage is worth more than their house - an increase of 5 percent since April.

“Many homeowners used the equity in their house as an ATM, and this is no longer possible,” Tuluca said. “Renters on the other hand relied mainly on their income and thus their budget was more independent of real estate prices.”

The study also shows most people are concerned with price inflation: 62 percent are “very” concerned, and 24 percent are “somewhat” concerned. Just 13 percent are “a little” or “not concerned” with price inflation.

“Job concerns often dampen consumption and minimize the possibility of inflation—but not always,” Tuluca said. “Inflation is a real risk whenever the government attempts to spur economic growth and employment.”

The telephone survey of 627 randomly selected New Jersey adults who participate in their household’s financial decisions was conducted from Sept. 19 through Sept. 25, 2011, and has a margin of error of plus or minus 4 percent.