"We still may be among the leaders in having the lower case numbers... but we are standing in a very dangerous place," said Murphy. "The alarms are going off."
The statewide transmission rate rose to 1.35 in the last week from a spike in new COVID-19 cases, according to Murphy, who said that number will likely continue to grow as new data comes in.
"We are not past this," said Murphy. "Everyone who walks around refusing to wear a mask, or who hosts an indoor house party, or who overstuffs a boat is directly contributing to these increases."
Watch Gov. Murphy's July 31 briefing here:
The Sussex County Department of Health, meanwhile, said it is investigating a new cluster of infections, CBS2's Alice Gainer reported Friday.
Six teens tested positive for COVID-19. Five live in Sussex County, one lives in another. The teens are 17 to 18 years old, and all attended a graduation party. Health officials said contact tracing identified 24 people who came into close contact with them.
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Murphy said the limit on indoor gatherings remains at either 100 people or 25 percent capacity - whichever is lower. But, he said the limits could be lowered if the situation worsens.
"I'm not announcing any specific action today, but consider this as being put on notice," said Murphy. "We will not tolerate these devil-may-care, nonchalant attitudes any longer."
Airbnb recently suspended or removed 35 New Jersey listings that have received complaints or violated policies on parties.
"We have seen a distinct shift to younger, less chronically ill people," said Dr. Dan Varga, chief physician executive for Hackensack Meridian Health.
"While we are comfortable that the likelihood of young people actually dying from COVID is probably very, very, very low, as long as more people are getting infected, they're vectors for transmitting this disease to people who could die very easily," he said.
Watch Alice Gainer's report:
While all hospitals in the system are stockpiling supplies in case of a resurgence, Dr. Varga said there is something others can do to help prevent it.
"I think the thing that young people really need to know is that you wear the mask not to protect yourself. You wear the mask to protect others." said Dr. Varga. "It's an act of kindness."
The governor reported 699 new COVID-19 cases Friday, bringing the statewide total to 181,660. New Jersey's coronavirus death toll rose by 10, totaling 13,944.
Murphy said the latest data showed no in-hospital deaths over a 24 hour period for the first time since March 10.
CORONAVIRUS: NY Health Dept. | NY Call 1-(888)-364-3065 | NYC Health Dept. | NYC Call 311, Text COVID to 692692 | NJ COVID-19 Info Hub | NJ Call 1-(800)-222-1222 or 211, Text NJCOVID to 898211 | CT Health Dept. | CT Call 211 | Centers for Disease Control and Prevention
The news that cases are spiking makes local business owners fear the worst.
Diners were enjoying Friday night under the stars on the rooftop terrace at Biagio's Ristorante in Paramus.
For co-owner Tommy Perides, it's good to be open, but now he worries it may not last.
"It's the fear of going back to the way it was in March, where everything shut down," he told CBS2's Nick Caloway.
Perides was hoping to have indoor dining weeks ago, but the surge in cases is standing firmly in the way of that.
The house parties and clusters are irking small business owners whose livelihoods are on the line.
"It's disappointing to see just a bunch of kids not taking any responsibility for themselves, for their family and for whoever they might be associated with," Perides said.
Steve Goodman owns Mr. Geez Bistro in Lyndhurst.
"Gets me angry when so many real business people and regular people are trying to beat this thing and do the right stuff, and it's just a few crazy people," he said.
Goodman opened just seven months before the pandemic and says the business won't survive another shutdown, so he's pleading with people to take this seriously.
"This is not brain surgery. We can figure this out, but we have to do it together," he said.
There was some good news reported Friday. New Jersey remains among the top 10 states nationwide with the lowest number of active cases per capita.
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