2015 Economic Forecast: Sunny With Clouds On The Horizon

Jan 9, 2015

The Vermont Economic Outlook Conference is the creation of economists Art Woolf and Richard Heaps.  For 24 years, the conference has been held annually in Burlington.

Each year it attracts more than 200 attendees, many from the financial services industry, interested in national and state economic trends. Heaps is now retiring and Friday’s conference was the last.

The format has been similar from year to year. An opening speaker gives a national overview of the economy, then Heaps and Woolf offer their assessment of where the Vermont economy has been and where it’s going.

In the final conference, they offered a generally optimistic short-term outlook for Vermont.

The recovery will continue, they said, and while Vermont is not back to where it was before the recession, it’s getting there.

In fact, Heaps said, by the end of the year Vermont’s unemployment rate may fall from 4.3 percent to 3.5 percent. 

“That’s about as low as you’re going to go, so we’re going to be at full employment. We’re going to see businesses posting more and more help wanted signs, so that’s going to be good news for us,” Heaps said.

Economics may be about numbers, but those numbers can be interpreted in different ways. 

That was evident in Heaps’ forecast for job growth in the coming year, which calls for 1,500 private sector jobs to be created in 2015. 

It’s much lower than the 6,000 new Vermont jobs predicted by a group called the New England Economic Partnership.

The more optimistic prediction is based on a belief that discouraged workers will return to the labor force and that new workers will come to Vermont.

Heaps does not agree. He sees no indication in population data that people are coming to Vermont, and he believes the labor force will not rebound because, as the state ages, many workers are retiring.

“We don’t have the folks that are going to get into the labor force,” he said.

The aging of Vermont’s population and the exodus of young workers was one of the themes of the conference.

“I can’t stress how important this is. If the state is going to expand, it needs more people,” Gus Faucher, an economist with a Pittsburg based financial services business told the audience.

Faucher said immigration reform might bring more prime age workers to Vermont. He said the state must also find ways to keep young Vermonters from leaving.

“If population is falling, employers aren’t going to be looking for you. They want to go where the people are, where the workers are. So the fact that the population in Vermont is falling is a significant concern and something the state is going to need to address over the longer run,” said Faucher.

Woolf said Vermont’s population was historically flat until about 1960, which marked the beginning of a 30 year growth trend.

He says some government policies might help, but flat or declining population is an issue across rural America.

“Ultimately what we’d like to see is an increase in population, especially working-age population which would translate into job growth. It’s going to be really hard to reverse that trend,” said Woolf.

The occasion also marked the end of the monthly Vermont Economy Newsletter, which Woolf and Heaps have published since 1991.