Gov. Phil Murphy told South Jersey business leaders Wednesday that his administration expects the state is poised to enter a recession, though he said he believes the downturn will be far less severe than the one caused by the 2008 subprime mortgage crisis.

“I’m in the camp of a shallow — real but meaningful — but a shallow, fairly short-lived recession, and part of the reason I believe that is there’s an enormous amount of liquidity on the sidelines,” Murphy said during the South Jersey Chamber of Commerce’s annual luncheon.

Murphy suggested $1.4 billion in unspent American Rescue Plan Dollars and the state’s $6.8 million surplus — combined with billions more in federal aid the state is expected to receive under the Bipartisan Infrastructure Law, the CHIPS Act, and the Inflation Reduction Act — would help the Garden State recover quickly.

New Jersey’s economy healed slower than those of most other states in the aftermath of the Great Recession, with some impacts lingering for a decade after the crisis.

The state has enjoyed booming revenue as it emerged from the pandemic, but Treasury officials have warned they expect tax collections to moderate in the current fiscal year. The first signs of that moderation have already appeared.

Collections from New Jersey’s major revenue sources — those include the state’s sales, income, and corporate business taxes — in November grew by only 0.5% over the same month in the prior year.

Officials from the Treasury and Office of Legislative Services said November’s sales tax collections only surpassed those in the prior year because November 2021 had one more Wednesday than November 2020, meaning employers made an additional withholding.

Overall, the administration expects fiscal 2023 revenue to drop by 3.2% as compared to the prior fiscal year. Treasury officials are expected to release December revenue figures this week.

Rising inflation, weakened consumer spending, and surging interest rates had for months led economists to believe a recession this year is likely. Last month, a Bloomberg survey of economists put the chance of a 2023 recession at 70%. 

But more recently, positive signs have led some economists to say the nation is headed for a so-called soft landing, meaning an economy that slows but does not head into recession.