7-5-16 – Vermont GDP: Gross Disaster Product

by Chris Campion

Art Woolf, longtime economics professor at the University of Vermont, recently wrote about Vermont’s GDP being the lowest in the nation – even lower than a state with a smaller population than Vermont:

The best summary statistic we have to describe a state or nation’s economy is gross domestic product, the total dollar value of all goods and services produced within its borders.  Vermont’s GDP — $30.4 billion in 2015 — pales in comparison to the U.S. total of $17,800 billion.  That’s usually referenced as $17.8 trillion, but it’s hard enough for me to conceptualize a billion dollars, much less a trillion, and comparing Vermont’s GDP to the nation is best done using the same units of measure.  We could also say that Vermont’s GDP is $0.0304 trillion, but that’s even harder to conceptualize. At any rate, Vermont’s GDP is the smallest of any state in the nation, below even Wyoming, the only state with fewer people than Vermont.  At the other end of the list, California leads the nation with a GDP of $2.5 trillion.

As we’ve noted beforeVermont has been at the very tail end of economic growth as compared to the other 49 states.

But worse, even when comparing a barely anemic growth rate in GDP in Vermont to New Hampshire’s more robust rate, there is much more compelling economic evidence that the state is trending downward.  In a very critical category:  Income.

GDP goes up in both states, but incomes go down in Vermont. Shocking.

Vermont’s median household income has never been higher than New Hampshire’s, at least going as far back as 2000 (earliest year of the FRED data).  New Hampshire’s population is roughly twice that of Vermont’s, but on the median household income basis, that population factor is accounted for.

Why?  Why are Vermont incomes lower, and even trend negative starting in 2013?  If those trends are negative in 2013, why would Vermont’s sitting governor, Peter Shumlin, declare Vermont to be a “great” place for jobs in 2014?  How “great” can it be if incomes are going down?

Worse, the trend in Vermont is increasing spending and employee hiring in the public sector, while NH has been trimming the number of employees in the public sector.  Vermont’s answer to stagnation is to hire more employees; New Hampshire’s seems to be the opposite.

One of these trends is not like the other.

In fact, between the peak of government employees for both states in the January 2010 timeframe (above), until January 2016, here’s how NH and VT compare:

 

nh vt govt employee split

Incomes do not go up when state spending increases to hire more people.  The dollars spent on state employees come from the private sector, and the higher the private sector is taxed, the slower the economy will grow.  So how does VT and NH compare, in total taxes?  Vermont is ranked 12th in total taxes; New Hampshire is ranked 49th.

This is not a race you want to be first in.

In other words, if you’re looking for growth prospects, higher incomes, and opportunity for yourself and your family, Vermont might not be the state you’re looking for.

{ 4 comments… read them below or add one }

Don Chioffi July 6, 2016 at 4:47 pm

The bottom line is that those in Montpelier supposedly representing those of you that care at all about these dire stats, really do not care at all about you. They care only about the new breed of wealthy transplants to our state who can afford the bucolic scenery( and the solar and wind farms)—you know, the ones that can afford these taxes because they either came from states where it is much higher or they have so much money that it really doesn’t matter to them. They could care less about jobs for the middle class. We Vermonters are nothing more than servants to them—and all we are getting is just that—-service industry jobs. Our industry is gone and people are leaving this state in droves—leaving an even lower number of us to pay these ever increasing taxes and fees—-oh yes—fees—we haven’t even gotten to that sorry state yet!

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jim bulmer July 8, 2016 at 10:34 pm

Don, Right on!!! And they buy the mcmansions. The mid-value homes sit with “For Sale” signs with no buyers. The only solution is to vote the Dems OUT in November!!!!!

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Ed Brault July 9, 2016 at 12:31 am

Another reason why my wife and I left when I retired. We could not live on my retired pay, even with VA disability and Social Security. Between house payment, energy cost, groceries,car fuel and taxes, moving to South Carolina boosted our spendable income by nearly $2,000/month.

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Rick November 29, 2016 at 1:31 am

I know Burlington is a really expensive place to live but I didn’t know Vermont is basically the poorest state in the country. Our experience with Burlington is similar to the name in your title- a disaster. We pay 1600 with utilities for an apartment that had collapsing plumbing, the ceiling was pealing off, and it was the opposite of cozy. Other apartments we saw were even more disgusting. There was nothing to do either. To top it off my wife had a fit and the police and DCF came over and took our kids by completely fabricating facts to the court. DCF continued to make up stories about us, all the while pressuring my wife to attend a program for people with drug or alcohol problems (neither my wife or I drink or do drugs), for homeless single mothers (we are married and have an apartment), or for mothers with severe mental illness (our Vermont psychiatrist diagnosed my wife with general anxiety disorder- not at all a severe problem). After hearing that some of these programs (like the VNA) can’t afford their staff and are cutting down their budget, we have a strong suspicion that Burlington, or perhaps Vermont, tries to force compromised families into programs by misrepresenting facts about families to the court. I wish there was more public awareness about this in Vermont. We ultimately had to leave our apartment in Burlington because after several months we decided it had a dust mite infestation (I developed such a severe rash I had to go to a hospital and the rash went away once we left the apartment). We asked our landlord to fix the problem and he ignored our emails. We called the city and they ignored us as well. We ended up opening the panel that goes into the crawl space in an attic and around one hundred years (six garbage bags) of dust fell into the apartment. We’re staying in a motel now and can’t wait to leave Vermont. Add crooked to your description of Vermont as poor (as well as looting the locals/families for funding the state can’t afford).

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