New Year, New Governor

New Jersey businesses and Gov.-elect Mikie Sherrill are faced with myriad challenges and opportunities in 2026, all while operating under a backdrop of uncertainty.

By Jim Pytell, Managing Editor On Jan 12, 2026

As the business community turns the page to 2026, it appears as if the new year will be characterized by a few major themes: change, challenges, uncertainty and opportunity.

After eight years under the Murphy administration, New Jersey elected Congresswoman Mikie Sherrill (D-11th) to be the state’s 57th governor. Her victory marked the first time a party has won three consecutive gubernatorial elections in the state in 60 years. However, while she shares party affiliation with the outgoing governor, Sherrill pushed back against the label of “Murphy 2.0” during her campaign, signaling a potential shift in policy approach during her tenure.

“I think that both sides of the aisle understand that voters are most concerned with the cost-of-living, and therefore the incoming Sherrill administration will likely focus on affordability and efficiency issues,” says Benjamin Dworkin, director, Rowan Institute for Public Policy & Citizenship.

When she takes office later this month, Gov.-Elect Sherrill will inherit one of the most unaffordable states in the country and be tasked with finding solutions to make the state more affordable for residents and businesses alike.

Surging Energy Prices

New Jersey’s rates for electricity are among the highest in the nation and those rates increased by about 20% this summer due to increases in the recent PJM Interconnection capacity auction.

Sherrill has committed to declaring a State of Emergency on utility prices on Day 1 of her administration in order to freeze rate hikes for ratepayers, though there is a question as to the level of control she has over the price of electricity bills, namely when it comes to transmission (overseen federally) and generation (charges determined through auctions run by grid operator PJM). 

“The state’s ability to move the needle down on utility costs is limited,” says Charles Steindel, resident scholar, Anisfield School of Business at Ramapo College of New Jersey. “Any short-term fixes could well increase longer-term problems.”

Steindel did add that providing input into solving the problems of PJM is something that should be on the table for the state, though Sherrill has gone as far as stating she would take on PJM in court if it doesn’t “prioritize ratepayers.”

“As we said when the Energy Master Plan was introduced six years ago, you cannot put ideology ahead of practicality as part of an energy transition,” says Ray Cantor, deputy chief government affairs officer, New Jersey Business & Industry Association (NJBIA). “The rate increases and sticker shock in our electric bills resulting from New Jersey going from a net exporter of energy to a net importer of energy is something we and others predicted six years ago.” 

Sherrill has said she wants to build out New Jersey’s energy arsenal to lower prices in the long term, including building new, cheaper, and cleaner energy generation, expanding storage capacity, and modernizing existing natural gas facilities to make them cleaner and more efficient.

Dworkin adds that while offshore wind was a priority under the Murphy administration, it likely won’t see such a push from Sherrill given the pushback it has received.

“However, there is likely to be a big push to reduce the current backlog of New Jersey-based energy projects that are ready to be part of the regional electric grid,” Dworkin says, adding that bringing these projects online might reignite a surge in other energy producing initiatives. 

Healthcare, Housing & Property Tax Challenges 

On healthcare, Sherrill has said that she plans to lower prescription drug prices by holding Pharmacy Benefit Managers (PBMs) accountable for passing discounts to consumers, rather than prioritizing their own profits.

From an economic perspective, Steindel says that trying to rein in the cost of public programs could be one of Sherrill’s key budget priorities in the healthcare space – though he adds that uncertainties about how the federal government will be acting in areas such as Medicaid could make this a challenge.

Another focus area for the governor outlined in NJBIA’s Blueprint for a Competitive New Jersey states that the state should re-engage the Mandated Health Benefits Advisory Commission to weigh in on referred legislation and avoid policies that will increase insurance costs that are largely paid for by job creators.

Separately, Sherrill says she plans to increase new home construction to help with the decline of housing inventory in New Jersey, as well as work to provide financing and assistance to municipalities to help them repurpose underutilized infrastructure, like converting commercial buildings into housing units.

She also says she plans to crack down on landlords who discriminate against families and neglect to keep their properties in livable condition.

On property taxes, Sherrill said she supports the existing Stay NJ property tax relief program, and the ANCHOR program, both instituted by Gov. Phil Murphy.

Red Tape, Transparency & Regulation

Additionally, costly, duplicative and burdensome regulations continue to drive up the cost of doing business in the state. “Elected officials must also recognize that while some state regulations are essential for safety and fairness, overregulation and excessive mandates are a drag on business productivity, innovation, and growth that discourages startups and induces New Jersey job creators to expand or relocate in more pro-business states,” says NJBIA President and CEO Michele Siekerka. 

“We can find a balance that protects public interests without stifling economic growth, jeopardizing jobs, and making our great state a constant outlier.”

Sherrill campaigned on making government more efficient and transparent, and has said she wants to eliminate red tape and permitting delays, affording people the ability to be able to see in real time where they are in an application process, for example.

Economic Conditions & Uncertainty 

While a certain level of uncertainty is always expected with a new administration, ongoing decisions from the federal government on tariffs, interest rates and various forms of funding compound this issue, creating an even more unpredictable environment that is increasingly challenging for the state’s job creators.

As for the New Jersey economy, Steindel describes it as, “at best, fair.”

According to the latest jobs report released by the state Department of Labor and Workforce Development at press time (the latest figures available due to the government shutdown), total employment in New Jersey grew by 7,500 in July, despite a loss of 5,600 private-sector jobs.

Amid the apparent growth, New Jersey’s unemployment rate in July remained unchanged at 4.9%, according to the Bureau of Labor Statistics (BLS). Overall, the state unemployment rate has risen 0.3 percentage points from July 2024 to July 2025. Meanwhile, the national unemployment rate was 4.2% in July, according to the BLS.

A long-range economic forecast issued by Rutgers University’s New Jersey State Policy Lab predicted “continued softness in employment growth through 2027.”

“The state’s unemployment rate, averaging 4.7% in 2025, remains elevated and is projected to rise gradually to around 5.2% through 2026 and 2027 before stabilizing around 4.5% in the longer term,” according to the experts from Rutgers.

“The biggest concern is the vast uncertainty about the outlook – namely, ‘what will the tariffs do?’” Steindel says. “Even if the Supreme Court strikes down many of them, there will be a legacy of enormous uncertainty hovering over any business connected to foreign trade, which will impact the state’s logistics sector.”

He adds that the state’s logistics sector seems very vulnerable right now (including the ports) given the possibility of cuts in the volume of trade, and reductions in spending on imported products whose prices are rising with tariffs.

Other looming uncertainties noted by Steindel include who will be directing the Fed and what it will do with interest rates; as well as potential cuts to federal funding in a variety of areas, including federal aid to the Gateway tunnel project.

“There is clearly a large part of the Sherrill coalition that is upset with how things are going in Washington, D.C.,” says Dworkin. “The governor-elect will have to play a delicate game with the Trump White House to both garner support and assistance for economic development, while standing up in opposition when necessary.”

Opportunities & the Future 

While change and uncertainty loom, there are a number of opportunities on the horizon for businesses to look forward to in 2026 and beyond. New Jersey will host eight 2026 World Cup games, including the final at MetLife Stadium, with the tournament expected to have an economic impact of $2 billion in the region, with some 14,000 jobs created.

Given the state’s historical significance during the Revolutionary War, the country’s 250th anniversary is also expected to draw an influx of tourism over the course of the next year.

Additionally, continued technological advancement – most notably in artificial intelligence (AI) – will present areas for growth that span industries beyond New Jersey’s technology sector.

“Over the last eight years, Governor Murphy and his team planted a number of economic flags, trying to build cornerstones for future growth,” says Dworkin.

Examples include the state’s 12 Strategic Innovation Centers (SICs), as well as the film and television and cannabis industries, both of which were heavily supported by the Murphy administration, and, according to Dworkin, will continue to be supported by Sherrill.

“In her first year, Sherrill’s political capital will be as high as it ever will be,” Dworkin says. “Even so, she should expect to be challenged by legislators, even from her own party, who might have their own ideas for handling affordability and economic growth. She will probably need to use the full array of formal and informal gubernatorial powers to push through her vision and agenda.”

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