Economists Say Recovery Will Come, Just Not Yet

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(Host) According to a new report, it’s going to take another six months before Vermont’s economy shows solid signs of a recovery.

But the report predicts that recovery will come because the state’s unemployment rate is well below the national average and because the Vermont’s housing market is in better shape than many other states.

VPR’s Bob Kinzel reports:

(Kinzel) Every six months, the state economists issue a report on the condition of the Vermont economy and they project revenue growth for the next few years.

Last July, they predicted that the economy would begin to experience solid signs of recovery by this winter. But economist Tom Kavet says things are developing slower than he anticipated last summer.

(Kavet) "The trajectory that the economy was on that we saw in July has not really shifted into a higher gear. So we’re looking at a delayed recovery relative to where we were at last July."

(Kinzel) Even though Vermont’s unemployment rate is below the national average, Kavet says many businesses are still reluctant to hire new employees. He says the state’s construction industry has suffered enormous losses in the past 5 years but he says some new jobs were created in the aftermath of tropical storm Irene.

(Kavet) "There’s been a lot of re-employment that’s occurred. Some of it new construction some of it renovation but a lot of that money was from the outside and it has created a lot of jobs in that sector so that’s helped some and will be helping a little bit down the road. But that sector is way down in terms of overall employment."

(Kinzel) State economist Jeffery Carr is also concerned that fewer housing sales and a weak stock market during 2011 could seriously affect capital gains tax growth in the current fiscal year.

(Carr) "If you take all those things into account we feel comfortable with the forecast but certainly April this year is going to be much more uncertain than any Aprils that we’ve seen, even when we were in a recession, in the last couple of years."

(Kinzel) The report reduced the state’s revenue target for next year by roughly $10 million. Governor Peter Shumlin says the good news is that revenues are still expected to grow by almost 6 percent.

(Shumlin) "We’re on track in a very fragile recovery and if we can keep passing legislation in this building that balances the budget without raising broad-based taxes on struggling Vermonters we’re going to see I believe a steady continuous recovery in Vermont that’s going to grow jobs and economic opportunities."

(Kinzel) The report also shows that the housing market in Vermont declined less during the recession of any state in New England.

For VPR News, I’m Bob Kinzel in Montpelier

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