(HOST) Commentator Tim McQuiston says that Vermont is on something of an economic role. He says it’s not easily explained. Nor is it obvious in daily conversations with business people. But it’s there nonetheless.
(MCQUISTON) For the third consecutive year, Vermont has broken its own record for its national standing in per capita income. The federal government has been keeping track of this state-by-state statistic since 1969. Back then, Vermont ranked 31st. As the years progressed, things actually got worse as the 1970s recession spread into the 1980s and deepened in the Northeast. Remember mortgage rates approaching 20 percent? Remember gas lines?
In 1977 our national ranking fell to 39th in per capita income. But as the economy turned around and the Northeast made a comeback in the 1980s, Vermont’s fortunes began to rise. In 1989, we climbed all the way to 22nd best in the nation. That was quite impressive.
But still, the actual per capita income of $17,365 was still six percent under the national average. Big, wealthy states like California skew the average up. However, Vermont’s relative rank nationally by either measure was its highest on record.
Then the early ’90s recession hit. Vermont sunk faster than most states, though I’m not entirely sure why. It’s likely that the nosedive of the then red-hot real estate market, which punished the overly enthusiastic financial industry in New England, dragged Vermont down with it. The early 1990s were a bad time almost everywhere, especially in Vermont. In 1997, we bottomed out. The per capita income slumped back to more than nine percent under the national average and our rank fell to 33rd in the nation.
At that point, as you remember, the local economy rebounded. Fast. It’s almost shocking to see the progress made in just a few years. By 2001, we were all the way up to 23rd in the nation. Ten spots in four years.
But unemployment was not the problem. The problem was income, which became the focus of the Dean and Douglas administrations. Despite a brief but brutal rise in the unemployment rate in the early 1990s, the jobless rate improved much more quickly than income. In fact, last fall Vermont achieved the lowest unemployment rate in the nation. The missing piece has always been wages.
But last month the federal government released its per capita income report and Vermont had once again broken its own record. We rose to just a whisker under the national average and are now ranked 19th nationally. These are heady days for Vermont. Even after the big IBM layoffs of a couple years ago, we’ve somehow kept managing to replace lost jobs with more, higher paying ones.
The warning in all this is that the last time we peaked, a national recession took it all away, and more. We can all see the warning signs today: gas prices, federal budget deficit, escalating health care costs, foreign competition, a prolonged bear market.
But make no mistake. Vermont is in a much better position today to handle adversity, should it come, than it was in 1990. And if the adversity doesn’t come, Vermont might really start to make hay economically.
This is Timothy McQuiston.
Timothy McQuiston is editor of Vermont Business Magazine.