In New Jersey, it always seems that there is some good news and there is some bad news.First, the good news. The state has received two consecutive credit rating upgrades from Moody’s. In its latest upgrade, in April, the agency cited the state’s “solid economic recovery, with job gains leading the region and driving employment above the state’s pre-pandemic peak.”Now, the bad news. New Jersey still has the nation’s second-worst debt rating, according to Moody’s, just above Illinois.CNBC’s 2023 America’s Top States for Business rankings tell a similar story. New Jersey is this year’s Most Improved State, climbing 23 places to No. 19, and vaulting convincingly into the top half from a 42nd place finish last year.More coverage of the 2023 America’s Top States for BusinessThe bad news is that The Garden State is still one of the most expensive states in which to do business (No. 44), and among the least business-friendly (No. 48), according to the CNBC rankings.There is some room for optimism, however.Democratic Gov. Phil Murphy is reportedly planning to lobby the rating agencies for yet another upgrade, which could mean millions of dollars in savings on borrowing costs. He will come armed with a new, $54.3 billion state budget, signed June 30, that includes an $8.3 billion surplus. It also includes the third consecutive full payment of the state’s pension obligation, after years of underfunding that helped lead to 11 debt downgrades under his predecessor, Republican Gov. Chris Christie.Gov. Phil Murphy is sworn in as the 56th governor of the state of New Jersey at the War Memorial Building in Trenton, New Jersey, on Jan. 18, 2022.Tayfun Coskin | Anadolu Agency | Getty ImagesThe economy is growing, housing market is strongWhile New Jersey’s state finances are still in poor shape relative to the rest of the country, the improvement helps fuel a big jump in the Economy category of CNBC’s rankings. The state finished dead last in the category last year, but it rises to No. 19 this year.The state’s economy grew by 2.6% last year, the 13th best in the country, according to the Commerce Department.Helping to lead the surge is one of the strongest housing markets in the nation. Prices rose a healthy 8.3% last year, according to the Federal Housing Finance Agency, enough to boost home equity, but not enough to put real estate out of reach. The state finished roughly in the middle of the pack for affordability, according to the National Association of Realtors. And foreclosure activity edged lower, according to ATTOM Data Solutions.A residential neighborhood in Teaneck, New Jersey, Nov. 24, 2022Bloomberg | Bloomberg | Getty ImagesIn fact, New Jersey improved in seven of the 10 categories in the CNBC study. The state’s sometimes stifling bureaucracy dropped it to No. 48 for Business Friendliness from No. 47 last year. High wages and high taxes drop the state to No. 44 from No. 43 in Cost of Doing Business. The state falls one spot in Education as well, but is still in the top tier at No. 4.The new budget includes sweeping new property tax relief, particularly for seniors. And it allows a business tax surcharge on large corporations to expire this year.Improvement from here gets tougher, however. Housing markets across the country are slowing as interest rates rise. And Republicans in the state legislature were critical of the spending increases, which could hurt the state’s precarious fiscal situation if the economy slows.That is the bad news.More big Top States moversOther big moves in the CNBC rankings include a 20-place jump for Arizona to No. 14. An influx of small business lending, according to Small Business Administration data, helped improve the state’s Access to Capital rank (No. 17, versus No. 41 in 2022). A decline in violent crime helped the state’s rank for Life, Health & Inclusion, which rose to No. 35 from last place last year.Other notable improvements included New York, rising 16 places to No. 20 on a much-improved Economy. Delaware climbed 10 spots to No. 18. The state’s Economy ranking improved with the addition of new business formations as a metric this year.Leading the downside was North Dakota, which fell 23 spots to No. 36. It has been a difficult year for energy-producing states. North Dakota’s economy shrank by 1.3% in 2022. Yet worker shortages persist, hurting the state’s all-important Workforce ranking (No. 43 versus No. 31 last year). North Dakota nonetheless finishes No. 1 for Business Friendliness.Nebraska drops 21 places, tumbling out of the Top Ten to finish No. 28, hurt by a sluggish economy and job market. Kentucky fell 12 spots to No. 38 overall. Its Workforce ranking fell due to declining performance in state worker training programs.