(HOST) Vermont has lost quite a few jobs lately, yet other economic indicators appear to be healthy. Commentator Tim McQuiston has been pondering this seeming contradiction.
(MCQUISTON) Lately, it’s just been bad news and more bad news for the Vermont economy. Bombardier Capital just announced it’s closing shop after being bought out by GE Capital. A couple hun- dred jobs will be lost. This comes on the heels of Husky Injection Molding in Milton closing one of its plants and sending some of its manufacturing back to Canada. Add that to a year in which York Capacitor, Wallace Printing and Tubbs Snowshoes have closed, and C & S Wholesale Grocers relocated its headquarters, and you might come to the shocking conclusion that the wheels are com- ing completely off the Vermont economy.
Wait a minute. Vermont’s per capita income is at a historic high. The unemployment rate over the last year has been one of, if not the, lowest in the nation. It’s inexplicable.
Well, let’s try to explain it anyway.
When IBM shed 2500 employees a few years ago, some people, (ahem, like me), thought there would be a profound ripple effect throughout the economy. The effects would be found, not only in the economic vitality of Northwestern Vermont, but across the state. Consumer confidence and buying power would suffer. In- come taxes would sour. And real estate values would plummet.
OK. So maybe people didn’t think it would be that bad. But no- body, no body, thought the economy would be this good at this point. And if you could have foreseen a doubling of gas prices,
you would have been down right gloomy.
However, the reason Vermont’s economy is doing well right now, despite everything, is because of new money. Money has been flowing into the state of Vermont. Why? Because people want to live here, even if only part-time. And the people who happen to want to live here also happen to have money.
This demographic includes professionals and high-tech folks who want to find a more congenial place to live and work. The much ballyhooed “Vermont way of life” actually does draw people here. The colleges lure more and more students from out of state. Ap- plications are up across the board. Again, fresh money.
But perhaps where this phenomenon is most clearly seen is in the second-home market. Despite the fact that second homes are a pricey luxury and that the statewide property tax rate is higher on second homes than on primary residences, those from “away” are clamoring to get away to Vermont.
The benefit of the second home market to the state is pretty clear – from taxes to services to construction. Real estate has been the best investment for several years as bears continue to prowl Wall Street and interest rates have remained microscopic.
But let’s not get too big-headed. The risks to the local and national economies are out there. The Bombardier closing comes with real heartache and the loss of real good paying jobs. Perhaps the only thing we can say for sure is that the economy is always easier to predict after it’s happened.
This is Timothy McQuiston.
Timothy McQuiston is editor of Vermont Business Magazine.