Regional economy thriving

Vermont Business Magazine, Jul 01, 2004 by KElley, Kevin

The crowds thronging the Church Street Marketplace on a sunny Saturday afternoon with the Jazz Festival in full swing may offer only anecdotal evidence of the vibrancy of the Burlington area's economy. But statistics do confirm the impression that a promising recovery is under way in Chittenden County.

The region's unemployment rate dropped to 2.4 percent in April almost a full percentage point below where it stood a year earlier (3.2 percent). The latest figure for Burlington and its suburbs is also almost one point lower than the statewide unemployment rate of 3.2 percent and more than three points below the US average (5.6 percent).

About 2,500 jobs were added in Chittenden County during the past year, with 106,000 area residents at work in May. And continued job growth appears likely, says Michael Griffin, an analyst with the Vermont Department of Employment and Training. Specifically, predicts Art Woolf, publisher of the Vermont Economy Newsletter, unemployment in the Burlington area could fall another percentage point during the next 12 months.

The scene on Church Street last month left little doubt as to the health of the local retail sector, but the status of other segments of the economy - manufacturing, for example - can be hard to read on the Marketplace. And that sector does serve as "a good barometer of the status and direction of the economy since industrial development reflects business expansion and job growth," notes the latest Allen & Brooks report on market conditions in Chittenden County.

A recent pickup of 100 manufacturing jobs may thus be especially significant. And conditions for further growth appear favorable at each of the four leading manufacturing businesses in the Burlington area. IBM, Husky, General Dynamics and IDX. But the current situation does not portend a manufacturing renaissance in Chittenden County. The April total of 14,750 manufacturing jobs in the Burlington area is still 800 less than the number for the same month of 2003.

"Manufacturing isn't going to come back to where it was, employment-wise," says state economist Jeffrey Carr. The deep job cuts made during the past couple of years at IBM and other local goods producers will sear the area's economy for some time, he predicts.

The memory of those losses leads Carr to sound a cautionary note in his generally optimistic forecast.

"It's looking like we'll see pretty good growth the next 6-12 months," he says, "but that's predicated on not losing ground at the major employers. There's still a need for caution, especially in light of what's happened in the case of some of those employers in the last few years."

Woolf agrees that while the local economy now seems "pretty healthy," the pace of growth in the coming period is unlikely to match the torrid tempo of the late 1990s.

Employers themselves also appear moderately bullish. A recent survey of CEOs by the Vermont Business Roundtable found that half expect employment to increase, while nearly the same percentage anticipate no change in Vermont job numbers. Only two percent foresaw a decline in employment.

"Overall, our members continue to view the next six months as a stable period of activity in sales, employment and capital expenditures," says Roundtable president Lisa Ventriss. "We are not seeing an indication that the Vermont economy will heat up quickly during that time frame."

Most of these projections are consistent with what national analysts are saying about current trends in the US economy. A recent Federal Reserve survey of professional forecasters suggests that the economy will grow a strong 4.6 percent this year and slow slightly to a stillrobust 3.9 percent in 2005.

"The Vermont economy is going to move as the national economy does," Art Woolf says. The conventional wisdom about Vermont being slower to emerge from recessions than most of the country no longer applies - if it ever really did, according to Woolf. Economic conditions in the state now closely mirror those for the country as a whole, he says.

"That's because our economy is diversified much like the United States'. But at the same time we're actually not all that diversified in Chittenden County because this economy is still dominated by IBM," Woolf notes.

If Vermont does closely follow the national economic lead, then the possibility of a slowdown early next year cannot be discounted, warns Jeff Carr.

"Some argue that the bad economic news tends to come in the first year of a president's second term," he says, adding that the same could apply to the first year of a new president's term.

Either way, Carr continues, a variety of forces could push the national economy - and thus Vermont's - into a downturn, if not a full-blown recession, in the first half of 2005.

Wayne Roberts, head of the Lake Champlain Regional Chamber of Commerce, agrees that the Burlington area economy will probably move in tandem with the US economy. But Roberts points to a few factors unique to Vermont that may provide an extra boost to the state's payrolls. The Legislature's actions this past session in regard to Act 250 and to the stormwater permit process could bring a surge of development activity in Chittenden County, he suggests.