Vermont’s economic recovery will progress along with the rest of the country in 2015, but the state will continue to lag in job and population growth, according to forecasts presented Friday morning in Burlington.
Economists painted a generally rosy picture for the coming year during the 24th Annual Vermont Economic Outlook Conference, held at the Sheraton Burlington Hotel & Conference Center. About 150 attendees – primarily from banking, real estate, energy and other financial industries – also heard that the state isn’t adding as many jobs as the rest of the nation. And while Vermont’s number of residents of prime working age declines, so does its prospects for attracting new and expanding businesses.
“My forecast is they’re not going to come in here,” said Richard Heaps, a former University of Vermont economics professor and co-founder of Northern Economic Consulting Inc., the Westford-based company that publishes the monthly Vermont Economy Newsletter and sponsors the economic conference. “We’re going to grow slowly.”
Heaps calculated that Vermont added about 1,900 jobs in 2014 and projected another 1,500 new positions this year. A reflection of the state’s size – it represents just 0.2 percent of the total U.S. economy – those numbers barely overcome the margin of error for such estimates, he said.
Over the past three years, Vermont has trailed the U.S. job growth rate, adding 2.5 percent compared with 5.6 percent nationwide. “We’re growing at about half the rate of what the country is doing,” Heaps said. “It’s not the robust growth we see elsewhere.”
Heaps also noted the shutdown last month of the Vermont Yankee nuclear power plant in Vernon, which will take years to complete decommissioning, but will ultimately hurt the Windham County economy and surrounding area. The plant employed 600; just over half of them will remain during the next five years.
Vermont gets a boost from its tourism and restaurant industries, which accounted for about 800 of those new jobs last year. A good ski season in the past few winters has helped and could do the same this year, Heaps said. The most well-off U.S. consumers – who have financially recovered faster than those with lower incomes – are key visitors to the state’s mountain resorts.
As Vermont loses young adults who seek their fortunes in bigger cities, baby boomers are aging, creating an increasingly older population that’s less and less in the workforce. With fewer laborers available, companies are less likely to locate or expand in the state, said Art Woolf, co-founder and editor of The Vermont Economy Newsletter.
Today, about 15 percent of Vermonters are older than 65. Woolf projected that demographic would account for almost 27 percent of the population by 2030.
The state has about 300,000 jobs now, Woolf said. But because of its stagnant and aging population, it stands to lose 35,000 of those in the next 25 years, he said.
On the brighter side, those aging baby boomers will need more health care, which points to growth potential in that sector of the economy.
Vermonters also have more money since the recession. Median family income inched up to about $73,000 in 2013 – close to where it was in 2007 – and is expected to continue to rise, according to the economists. Median family income will reach $100,000 by 2040, Woolf projected. The median is the point at which the same number of families have income below that amount as they do above it.
Most U.S. consumers, including those in Vermont, have more money in their pockets today because of the dramatic drop in gasoline prices, now ranging between $2.22 and $2.99 per gallon across the state, down almost $1 from a year ago. That amounts to an average household savings of about $900, Heaps said. And in Vermont, lower heating oil costs – particularly compared to the price spike last winter – further bolsters household finances.
All of this has helped encourage consumers and businesses to resume spending since the recession, when they focused instead on paying down their debts, said Gus Faucher, a senior economist for PNC Financial Services Group, during his presentation at the economic conference.
The nation overall has surged ahead, with year-over-year growth in gross domestic product reaching 3.5 percent for the past four quarters, said Faucher, who is based in Pittsburgh. Last year, the country saw the most job growth since 1999, adding 2.95 million positions.
Wages have lagged, but Faucher said he expected this to change as greater demand for workers started to tap out supply, forcing employers to pay more.
“Businesses are in good shape to go out and hire,” he said.
For 2015, he forecasts an increase in auto sales, improvements in the housing market and an ongoing boom in domestic energy production.