Economists predict gradual recovery in 2003

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(Host) After a year marked by a loss of high paying manufacturing jobs, and a dramatic decline in state revenues, Vermont economists say they’re optimistic that the state’s financial fortunes will improve in 2003. But they warn the upturn will be gradual.

VPR’s Steve Zind reports:

(Zind) Jeffrey Carr says the state’s economy is going to have to crawl before it can walk. The state’s economist says the first thing he’ll watch for in the coming year is not good news, as much as a lack of bad news.

(Carr) “What I’d look for is a stabilization in some of the discouraging job reduction announcements that we’ve seen at some major Vermont employers, particularly in the manufacturing sector.”

(Zind) Carr says Vermont has seen the worst of the current downturn. He says the economy has been improving, but the signs are difficult to spot.

(Carr) “A lot of economists like to see a sharp out – they call that a ‘V’ downturn. A kind of gentle slope in and gentle slope out, they call a ‘U.’ I’m afraid this time we’re looking at an ‘L,’ which is a fairly sharp in, with a holding pattern at the bottom for a while, with a very gradual slope coming out.”

(Zind) Carr says the Vermont economy is improving so gradually, people don’t yet feel it and that and that affects consumer spending and business expansion plans.

Economist Art Woolf agrees that although the worst days are behind us, economic improvement will come slowly. Woolf says while job growth in Vermont remains sluggish, based on payroll taxes, there are encouraging signs Vermont workers are doing better.

(Woolf) “If we look at the withholding taxes that the state tax department is getting, those are up about 3-4% over last year. That’s a nice growth. I won’t call it robust, but it shows that people are earning incomes and incomes are growing.”

(Zind) Woolf says the state budget will be slow to recover from the hit it took last year. He says uncertainties like the effects of a war with Iraq and the threat of terrorism are wild cards in any economic predictions. But barring any major calamity, the Vermont economy will grow this year.

(Woolf) “At a slow rate. It’s not going to be back like the late 1990s, when every store in Vermont had a help wanted sign on it. I don’t think we’re going to see that in quite a while.”

(Zind) Woolf and Carr agree that the state’s economic future is also closely tied to how well the national economy does in the coming year.

For Vermont Public Radio, I’m Steve Zind.

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