Vermont has begun the new year on strong economic footing and can expect to see continued increases in state revenues for at least the next three fiscal years, according to economists hired by the Legislature and the governor.
Tom Kavet, an economist commissioned by the Legislature, and Jeff Carr, the economist hired by Gov. Phil Scott's administration, delivered a consensus update Wednesday that projects general fund revenues to come in $144 million higher over the next three years than previously forecast.
Kavet said the state and national economy are performing far better than economists predicted six months ago. Thanks to low unemployment, strong job growth and tamped-down inflation rates, Kavet said, “aggregate measures of economic activity have rarely been better.”
“Entering 2025, the economy is doing really well — exceptionally well,” Kavet told Scott and lawmakers Wednesday.
If somebody wants a job, they can get a job here. And that’s nothing to sneeze at.Tom Kavet, economist for the Legislature
The briefing came as President Donald Trump issues a flurry of executive orders that could have far-reaching impacts on national and local economies. Policy changes promised by the new administration include tariffs on foreign goods, tax cuts, federal budget cuts and restrictive immigration measures that could affect labor force growth.
The economic outlook issued by Kavet and Carr does not fully incorporate the prospective impact of those potential changes.
“We pretty much took a wait-and-see approach to what would actually happen, because there’s been so much talk, and it’s just hard to know what talk is going to translate into what policies,” Kavet said. “It’s impossible to go down all the rabbit holes of stuff, but as they are clarified, we will look at them.”
Kavet and Carr said Vermont has benefited from national economic tailwinds. The state’s 2.4% unemployment rate, as of November, was second-lowest in the nation.
“It’s a really good thing,” Kavet said. “When you think of what’s the purpose of an economy, if somebody wants a job, they can get a job here. And that’s nothing to sneeze at.”
And payroll job growth in Vermont, a key measure of economic wellbeing, has outpaced the national average for seven of the last eight months — the first time that’s happened in 14 years, according to Kavet.
Vermont continues to face demographic challenges. Revised Census Bureau data now says that 2024 marked the first time that Vermont has seen a year-over-year decline in overall population since 1957. And the total number of births in the state hit its lowest level in at least 44 years.
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