When Gov. Phil Scott declared a state of emergency on March 13, 2020 in response to the COVID-19 pandemic, nearly every sector of the state’s economy was affected.
For many businesses, the restrictions on their operations were painful to their bottom lines. For some, the safety measures proved fatal as shops and inns and restaurants closed and unemployment soared throughout Vermont.
Now, 10 months later, still nervous about the future and concerned about when the pandemic will be brought under control, nearly 400 people sat in on a Jan. 13 webinar hosted by the Vermont Chamber of Commerce featuring the two people who have been the public face of the state’s response to the pandemic — Health Commissioner Dr. Mark Levine and Department of Financial Regulation Commissioner Mike Pieciak.
During their 90-minute presentation, Levine and Pieciak outlined the state’s pandemic response thus far, and offered cautious optimism about how quickly the state can bounce back economically — particularly as Vermont ramps up its vaccination efforts.
“Public health and economic health can coexist,” said Levine. “We don’t have to choose one and compromise the other.”
‘Cooperation, compliance, and prioritization of health’
Despite the economic pain and social turmoil of the early months of the pandemic, the virtual shutdown of parts of the state’s economy deemed “non-essential” and the shift to remote working achieved what state officials had hoped for, Levine and Pieciak said.
Hospitals were not swamped with COVID-19 cases, new coronavirus infections were kept to a minimum, and Vermont avoided the worst of the early stages of the pandemic during the grim weeks of March and April.
But both Levine and Pieciak made it clear that there cannot be a full economic recovery in Vermont, and in the rest of nation, until the virus is suppressed.
Levine said the state has learned a lot about controlling COVID-19 since last March, but thanks to the “cooperation, compliance, and prioritization of health” by Vermonters, the state achieved and continues to achieve the status of being one of the least affected states in terms of cases.
Vermont’s public health efforts were among the most successful in the country. As a result, by May, restrictions were gradually lifted, out-of-state travel was allowed, and there were signs that the state’s all-important tourism and hospitality industry would recover in time for the winter season.
But just as things were getting closer to normal in the fall, a renewed and more virulent phase of the pandemic struck in November.
The number of new cases and deaths rapidly increased to close out 2020. Travel restrictions were reimposed, as were limits on gatherings in public places.
The long slog
The watch phrase in those early days of the pandemic was “flattening the curve,” referring to the graph that predicted the capacity of the pandemic to overwhelm the capacity of the health care system. If Vermonters would stay home as much as possible, the rate of infection would be lowered. They did.
Once that was achieved, Levine said, the state came out of the closures and restrictions “in a phased and gradual way, using public health and science” as a guide.
“We asked people to do incredible things in a short period of time,” Levine said, citing the widespread acceptance of wearing face masks and social distancing, which he said had a huge impact on reducing the number of COVID-19 cases in Vermont.
Now, as more is known about how the virus is spread, Levine said the state can contain outbreaks without resorting to the near-total shutdown of daily activities that Vermont went through last spring.
He said the state has a good testing system now, so that those infected can be isolated and anyone they came in contact with can be found and quarantined. But even that system is not infallible, since Levine said as many as 40 percent of new infections are spread by people who have no symptoms of the virus.
Older people next to get the vaccine
Levine also cautioned that the vaccination of Vermonters will take time due to shortages of the vaccine. The focus for the next couple of months will be on making sure people over age 65 get inoculated, since data show that they are the most likely to get seriously ill and die from the virus.
“It’s going to take months and months to get the vaccine out to a large amount of the population, so everyone, including those who get vaccinated, will need to continue wearing a mask and distancing and avoiding crowds,” he said. “There’s no way around it, because we don’t yet know if the vaccine will prevent you from transmitting the virus.”
The goal, he said, is to reduce the number of new cases, hospitalizations, and deaths, while keeping schools open and supporting a return to a pre-pandemic economy.
Levine said every infection that is prevented “is a step toward health and economic recovery.” If the state’s efforts succeed in suppressing virtual growth, life might start returning to normal by late spring or early summer.
But Levine said the many things that Vermonters have become accustomed to, such as working from home and meeting via videoconference, will likely need to continue for months to come.
Pandemics are bad for business
Pieciak, who has led the data team tracking the pandemic since last March, said that pandemics “are bad for the economy, regardless what the public health response is,” but Vermont’s response has set up the state for a faster recovery.
He shared historical data from the 1918-19 flu pandemic that showed most of the U.S. cities who were aggressive in their public health response recovered from the economic effects of the pandemic more quickly than cities that were lax or tardy in their response.
He praised the Vermont business community for its cooperation over the past 10 months, behavior that he said has not always been the case elsewhere in the nation.
“The last year has been extraordinarily challenging,” Pieciak said, adding that not everyone was happy with “the shifting guidance and restrictions on your businesses,” and that “sometimes [there was] not always understanding or appreciating why the restrictions or policies were put in place.”
But Pieciak said the support of the business community “really helped us” to effectively respond to the pandemic.
Aside from grocery stores, Pieciak said, every sector of the Vermont economy was hurt by the pandemic, with education, health care, and leisure and hospitality being the three top sectors affected.
The state’s gross domestic product (GDP) declined 38.1 percent in the second quarter of 2020 before recovering to rise 47.9 percent in the third quarter of the year.
The final quarter numbers are still being compiled, Pieciak said, but 2020 will likely end with a lower overall GDP for Vermont than in 2019.
He said the state is well-positioned to recover, but there are trouble spots. While total consumer spending in Vermont declined by only 0.5 percent for the first 11 months of 2020, spending on restaurants and hotels declined 44.8 percent and spending on entertainment and recreation declined 87.1 percent.
Economic inequality is also a factor, as Pieciak pointed out that in 2020, while the S&P 500 stock index showed an 18 percent gain, demand at Vermont food shelves rose by more than 60 percent.
That disparity is reflected in the unemployment rates.
While those who earn more than $500,000 annually saw a 0.8-percent decline in employment through the first three quarters of 2020, middle wage earners ($27,000–$60,000) saw an 11.6-percent decline, and low-wage earners (less than $27,000) saw a 37.5-percent decline.
By industry, Pieciak said that the leisure and hospitality sector saw a 31.2-percent drop in employment, compared to a 12.3-percent decline for retail and transportation and a 4.9-percent decline in professional and business services.
Reasons for optimism
Both Levine and Pieciak agreed that the future health and economy recovery for Vermont hinges on how many Vermonters get vaccinated for COVID-19.
“It is critical to get the vaccine out to as many people as we can as quickly as we can,” said Pieciak.
But they cite other reasons to be optimistic about the ultimate recovery of Vermont’s economy in 2021.
Pieciak said the initial burst of federal stimulus money brought $1.2 billion of aid and “propped up and sustained our economy through the most challenging point of the pandemic.”
The stimulus also accounted for an increase in bank deposits in Vermont. Pieciak said the amount of money saved rose 22 percent, from $8.4 billion on Dec. 31, 2019 to $10.3 billion as of Sept. 30, 2020.
“That tells us there’s quite a bit of money to be spent by Vermonters, or lent out by our financial institutions once the pandemic is over,” he said.
A pent-up demand for travel will likely lead to a big influx of visitors once it is safe to allow out-of-staters back into Vermont.
More people moved into Vermont in 2020, and Pieciak believes that, if the newcomers decide to stick around, they will help diversify and strengthen the state’s economy.
But the only thing that is really certain for 2021 is more uncertainty, said Levine.
“Lots of things will evolve in the coming months,” he said, adding that once the winter months are over and people can get back outside again, the state’s travel policies, as well as restrictions on bars and restaurants, may be loosened to where they were in August and September.
Until then, “masks on faces, 6-foot spaces, and uncrowded spaces,” reminded Levine.
And wash your hands, too, the doctor said.