Vermont Economy Shows Signs of Strain Amid Layoffs, Budget Pressures

MONTPELIER — Vermont’s economy has shown signs of strain in early 2026 as layoffs, rising unemployment claims and declining job openings raise concerns about a slowing economic outlook across the state.

State government and private-sector employers alike have begun trimming costs. The Vermont Agency of Transportation announced plans to eliminate 31 positions as part of efforts to close a projected $33 million deficit in the state’s transportation fund, with 19 current employees expected to lose their jobs. Officials said the cuts are tied in part to declining revenue from gasoline and diesel taxes, which have historically funded transportation programs.

At the same time, some Vermont businesses have reported layoffs linked to broader economic pressures, including trade disruptions and weakening demand. One company in Westford said declining sales tied to federal tariff policies forced it to cut jobs for the first time in nearly 50 years.

Labor data also points to a cooling job market. The U.S. Bureau of Labor Statistics reported that Vermont job openings fell sharply at the end of 2025, dropping from about 16,000 openings in November to roughly 11,000 in December. The decline reflects slower hiring activity as economic conditions soften.

Recent unemployment data has been volatile. Weekly jobless claims in Vermont nearly doubled in late February, rising to about 790 new claims in a single week, compared with fewer than 400 earlier in the winter. Ongoing claims also remain higher than a year ago.

Despite these warning signs, Vermont’s overall unemployment rate remains relatively low by national standards, hovering around the mid-2 percent range. Economists, however, say the combination of layoffs, reduced hiring and budget tightening could signal a more challenging year ahead for the state’s small and rural economy.

For many Vermont communities — particularly those dependent on small businesses and seasonal industries — the months ahead will likely determine whether the slowdown becomes a broader economic downturn.