by Timothy McQuiston, Vermont Business Magazine Vermont initial weekly unemployment claims more than doubled last week to nearly 800. For the week ending February 28, 2026, the Vermont Department of Labor reported that there were 790 new claims, up 406 from the previous week and up 119 from last year at this time. New claims had leveled off at under 400 after the holiday season; ongoing claims remain high. Total claims were 4,688, up 403 from the week before and are up 204 from last year at this time. Initial claims, which tend to be lowest in the summer, were 186 in September 2025.
Nationally, all three major stock indexes suffered this week as the bombing in Iran continued, the jobs report was bad and, from last week, inflation was up. The Fed, which meets next week, had been expected to keep interest rates where they are in a wait-and-see mode. But the poor employment numbers coupled with a sagging stock market (the Dow, S&P and Nasdaq are all in the red for 2026) will put pressure on the Fed to cut rates to stimulate the economy. On the other hand, with stubborn inflation, even before this week's spike in gas and oil prices, the Fed must consider whether a rate cut would feed higher inflation.
Sarah Foster, Economy Reporter and Analyst for Bankrate, wrote today on LinkedIn:
"The U.S. economy lost 92,000 jobs in February. The unemployment rate ticked up to 4.4%. December and January payrolls were also revised down by a combined 69,000 jobs. All of it takes some of the shine off January’s surprisingly strong report.
"No, one month doesn’t make a trend. Some of this could reflect bounce back from unusually strong hiring during good weather in January, plus disruptions from a massive country-wide storm in February.
"But if you zoom out, you'll see this slowdown in hiring is more than just a one-off blip at this point. Since April, the U.S. economy has lost more jobs than it's created. Over the past three months, job growth has averaged 5,700, essentially flat. This isn't an economy that screams “normalization,” as Fed officials described it in January.
"Job losses can't just be blamed on shrinking government payrolls. Nearly every major industry lost jobs in February. Leisure and hospitality lost 27,000 positions. Private sector payrolls dipped 86,000. Even health care lost 28,000 jobs.
"Most important for all of us to remember is that not everyone feels slowdowns in the labor market equally. White unemployment held at 3.7%, but Black unemployment rose from 7.3% to 7.7%. Hispanic unemployment (now 5.2% from 4.9%) and Asian unemployment (4.8% from 4.2%) also climbed.
"If you're wondering what this means for interest rate cuts, it complicates everything. A weakening labor market argues for faster rate cuts. But inflation uncertainty — and an 11% jump in gas prices over the past week — raises the specter of stagflation.
"But here's what I keep coming back to: Why are we so hesitant to call a slowdown when we see one? Is it fear of being early? is it because this doesn’t look as bad as past downturns?
"If you’re in the labor market right now, does this feel like “normalization” to you?"
Senator Peter Welch (D-Vermont), a member of the Senate Finance Committee, today said: “President Trump’s economy is weak—there’s no question about it. Under his leadership, America is less affordable, has fewer jobs, and isn’t supporting working families or our farmers. There are economic consequences to the president’s reckless behavior. Trump waged a trade war with our allies by implementing his unconstitutional global tariffs, and now he’s pushed America into war in the Middle East. He is not focused on affordability or creating jobs — he’s focused on chaos.”
In Vermont for the weekly labor UI claims report, manufacturing accounted for 7% of the total, down 18 points from the previous week. Manufacturing overall has become a smaller part of the Vermont economy over the last 25 years and that trend appears to be continuing. The Service industry, which typically accounts for the most claims, last week reported 39% from the previous week, up 7 points. Construction was 15%, down 11 points.
Service hiring is strong during the holidays then slumps, while cold weather slows down construction.
The Vermont Unemployment Trust Fund is well capitalized. As of the most recent data, there was $313.1 million in the Trust Fund, down $1.9 million from the previous week (as claims are paid out on one side, employers are contributing to the fund on the other). The pre-pandemic Trust Fund balance on March 1, 2020, was $506.2 million.
Vermont tax revenues hover just below targets
Secretary of Administration Sarah Clark on February 20 released Vermont’s revenue results for January 2026, which showed the General Fund again lagged behind targets. The Corporate tax was well below expectations, but the Personal income tax bounced back and is now just ahead of expectations for the year. The Transportation Fund also missed its monthly targets, while the Education Fund exceeded its monthly target. Consumption taxes had an overall good month, which reflects on travel and tourism.
The State’s General Fund, Transportation Fund, and Education Fund receipts were a combined $378.85 million, representing collections -$0.33 million, or 0.09% below the $379.17 million monthly target from the updated consensus forecast as adopted by the Emergency Board at its January 16, 2026, meeting.
Total General Fund revenues for January were $274.03 million, -$1.41 million or 0.5% below the $275.44 million monthly cash flow target, driven by a third month of lagging Corporate Income Tax receipts.
Revenues in the Transportation Fund were $22.8 million, representing collections -$0.5 million or 2.1% below target, with receipts in the Purchase & Use and Motor Vehicle fees finishing below their respective January targets.
Monthly Education Fund revenues of $82.02 million were $1.56 million, or 1.9%, above their January cash flow target of $80.46 million, with all components except for Motor Vehicle Purchase & Use finishing ahead of monthly consensus targets.
Vermont’s unemployment rate holds at 2.6 percent in December
The Vermont Department of Labor has reported that the seasonally adjusted statewide unemployment rate for December was 2.6%. This reflects no change from the prior month’s revised estimate. Vermont has the third-lowest rate in the nation behind a tie behind Hawaii and South Dakota (2.2%). California has the highest rate at 5.5%.
The comparable United States rate in December was 4.4%, a decrease of one-tenth of one percentage point from the revised November estimate.
The civilian labor force participation rate was 64.0% in December, a decrease of two-tenths of one percentage point from the prior month’s revised estimate.
The data continues to show significant reductions in the Labor Force and Employed month-to-month and year-to-year. The Labor Force is the denominator in the equations, so when it goes down it minimizes the losses in the Employed category. The number of Unemployed is essentially unchanged.
See data tables below.
"The Vermont Department of Labor works directly with employers to help them hire, retain, and support the workers they need to succeed,” said Kendal Smith, Vermont Department of Labor Commissioner. “At the same time, we are helping Vermonters connect with available job opportunities as labor market conditions shift. Maximizing every working Vermonter’s potential helps workers build sustainable careers while strengthening and stabilizing Vermont businesses. Through partnerships with local Department of Labor offices (https://labor.vermont.gov/workforce-development/job-centers), businesses can access customized services and resources, while workers can explore additional training or education options to support their next steps.”
The seasonally adjusted Vermont data for December show the Vermont civilian labor force decreased by 1,171 from the prior month’s revised estimate. The number of employed persons decreased by 1,207 and the number of unemployed persons increased by 36. The changes to the labor force and the number of employed persons were statistically significant in the seasonally adjusted series.
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