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New Jersey’s Murphy Says Goldman Job-Cut Plan Signals Stress for State

·2 min read

(Bloomberg) -- New Jersey Governor Phil Murphy said Goldman Sachs Group Inc.’s plan to cut hundreds of jobs is a sign of impending economic strains that may force his state to set aside “a very sizable slug” from its budget surplus.

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The 65-year-old Democrat and former Goldman Sachs senior director said he had no insight into the firm’s plans. But the prospect of staffing cuts at the bellwether bank suggests widespread pain that may ripple through the economy, Murphy said in a telephone interview Wednesday.

“You’re going to see contraction,” he said. “You’re seeing it in Silicon Valley and technology firms. I’m sure you’ll see it in financial services.”

New Jersey will weather a downturn, he said, with the help of billions of dollars he has poured into the budget surplus. That decision was key to the state’s credit upgrades this year by the three major ratings companies, the latest of which came this week.

“Our planning is for the economy to soften meaningfully as a country and probably in the world,” Murphy, said.

For the fiscal year that began July 1, Murphy signed a record $50.6 billion budget that included more than $2 billion in relief for homeowners and renters shouldering the nation’s highest property-tax bills. The plan also earmarks a full pension payment for the second straight year -- a step not taken by New Jersey in 25 years.

It included a surplus of more than $6 billion, 10 times the $600 million cushion left by his predecessor, Republican Chris Christie, when Murphy took office in 2018. S&P Global Ratings and Moody’s Investors Service cited New Jersey’s surplus, pension payments and other financial steps in one-level credit upgrades in March, and Fitch Ratings followed on Monday.

Inflation at a four-decade high continues to roil financial markets even as gasoline prices and supply-chain issues have eased. The Federal Reserve is set to meet next week and is widely expected to raise interest rates by at least 75 basis points, although some investors are fretting officials will choke off growth by hiking rates too fast.

New York-based Goldman is preparing to eliminate several hundred roles starting this month, according to people familiar with the plan. Analysts expect the bank to post a more than 40% earnings drop this year, according to data compiled by Bloomberg.

While the governor said the state’s credit upgrades were a reward for hard work, he’s not counting on extended good financial times.

“It’s on our back to continue to produce, and we will do that,” he said. “In other words, make the full pension payment, reduce indebtedness, continually find ways to save money that don’t hurt either our employees or our residents, be more efficient in government, keep a very sizable slug for a rainy day.”

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