Vermont’s economic outlook ‘slow but sure’


Jeff Carr

Jeff Carr

Vermont is looking at a few more years of slow but sure economic recovery, according to a forecast presented by Jeff Carr and Matthew Cooper of the firm Economic and Policy Resources to a conference at the Federal Reserve Bank of Boston last Thursday. Carr, a former Essex Selectboard chairman, also serves as the consulting economist for Gov. Peter Shumlin.

Nationally, the report states, the short-term economic outlook hinges on several factors: Federal monetary policy, whether the current “pause” in congressional fiscal debates will last, the ultimate impact of the long-term unemployed and underemployed on household income and consumption, the progress of the tenuous housing recovery, and improvements in a still-fragile confidence level for households and businesses.

With so many factors that will shape economic recovery still unknown, a lot of uncertainty surrounds any forecast, Carr said. His analysis of Vermont’s outlook is based on a national model prepared by Moody’s Analytics.

Carr and Cooper expect Vermont’s recovery to be similar to, but more moderate than, the country’s as a whole. The reason for this remains the same as in previous outlooks: Vermont suffered less than many other states during the Great Recession, and therefore has less ground to make up. This is especially true for gross state product, inflation-adjusted real personal income, and the labor market.

“While the Vermont economy is not expected to establish any new records for output, job and income growth robustness over the 2014-2018 forecast period, the revised forecast calls for the continuation of very ‘tight’ labor market conditions and for a modest recovery in housing prices in the Vermont housing market,” they said.

All private sectors except information services are expected to grow. Despite a recent job fair at IBM in Essex Junction, the company’s significant layoffs since 2013 have hampered that sector, they said.

Carr and Cooper acknowledged the rumors of a pending sale of IBM’s Essex Junction computer chip manufacturing plant to Globalfoundries.

“Should the long-rumored sale actually go through (which certainly is possible at press time), it is likely that the forecast for the state’s manufacturing supersector will need to be re-evaluated,” they said.

Construction, leisure and hospitality, and professional and business services appear to be on the incline, they said. So do trade, transportation and utilities, though the imminent closing of Vermont Yankee in Vernon dims the prospects for the latter sector.

“While it is expected that a number of jobs would be needed post-closure, those jobs’ pay levels will be lower than the plant workers that they will partially replace,” the report said.

Chief among the challenges facing Vermont’s economic development are its remote and northern location, aging population, relatively high energy costs, limited access to investment capital and its reputation “whether deserved or undeserved” as a highly taxed state.

On the upside, the report listed Vermont’s skilled workforce, commitment to K-12 education, “well-developed telecommunications system,” accessible state government, low crime rates and brand identity for high quality of life.

Carr and Cooper highlighted a recent, first-ever statewide comprehensive economic development strategy completed by the state’s Agency of Commerce and Community Development. The strategy targets several barriers to development, such as access to financing and capital, workforce development, infrastructure, and fostering a competitive business environment.