"The state has lost 14,000 jobs so far this year, but more arelikely to come," said Hughes, who is the Dean of the BlousteinSchool of Planning and Public Policy at Rutgers University. Hetermed the current situation a relatively mild, "slow-motionrecession," and how it plays out will depend on the financialmarkets.

"Correcting all of Wall Street's excesses will take aconsiderable amount of time," he said. "Those excesses willcontinue to reverberate in New Jersey," and that reverberationcould come in the form of everything from consumer retrenchment,with sales tax revenues taking a hit as a result, to cutbacks inthe W/D supply chain sector.

On the positive side, high energy prices "could help regardingdistribution, and the state's geographic position may again becomeour most important factor," Hughes said. "Costs again matter," headded, noting that cost also comes into play as far as the state'slower office costs compared to New York.