Vt. economist says pandemic cash fueling economic boom
MONTPELIER, Vt. (WCAX) - The massive flow of federal cash into Vermont during the course of the pandemic has left the state on the brink of an economic boom not seen in the last 30 years, according to Vermont’s legislative economist.
Legislative economist Tom Kavet says two factors are driving Vermont’s economy -- the spread of the coronavirus and historic federal spending. “We will continue to be whipsawed by what happened during the pandemic and the responses to it,” he said.
That response has brought Vermont $10 billion in federal spending that continues to course through the state’s economy and into Vermonters wallets. Kavet points to new numbers showing total state tax revenues are currently $37 million above targets. “The three areas of strength have been personal income, corporate income, and meals and rooms, and there has been no category that has been below target,” he said.
Kavet says inflation, housing, and labor shortages could pose uncertainty to the economy and future tax revenues. He also adds that the economic trajectory will also depend on Vermont managing and learning to live with the coronavirus.
On State Street in Montpelier, Yellow Mustard Delicatessen and Bakery opened three months ago. the store’s Noah Hodgdon says locals appear to be comfortable going out, despite delta driving record-breaking cases. “The more people get vaccinated, it seems like everything is slowly getting back to normal. But everything’s not going to go back to normal, but a normal we can accept,” he said.
Lawmakers have their eyes on dumping more federal cash into the economy in 2022, including nearly $600 million in leftover stimulus and an estimated $2.2 billion from the infrastructure plan. But some are already puzzling how to address unmet needs due to a shortage of workers and low wages in critical areas like mental health, home health, and child care.
“We can’t use one-time monies to pay salaries, and a lot of this has to do with the wages that these organizations are able to offer, and that’s an ongoing challenge,” said Sen. Ann Cummings, D-Washington County.
State economists are slated to give their final forecast to the Legislature next month, setting the stage for upcoming budget negotiations this coming session.
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