In 2012, Vermont became the first state in the nation to legislate the compilation and policy use of an alternative indicator of macroeconomic performance known as the Genuine Progress
Indicator (GPI). (Maryland was the first to do so through Executive Order.) While Gross State Product estimates the dollar value of the gross receipts of the economy, the GPI estimates the
dollar value of the net economic benefit produced by economic activity in the state. GPI achieves this net figure by taking a basic measure of economic welfare--Personal Consumption
Expenditure--and adjusting it in light of various kinds of costs and benefits that GSP ignores. To accomplish this, GPI compilations assign dollar values to otherwise uncounted costs like
degradation of natural resources and to otherwise uncounted benefits like volunteer work and the domestic production (cooking, childcare, and the like) that Vermonters do for themselves.
- The GPI stands at about 66% of the state's Gross State Product (GSP) of $30.355 billion. 1 Some gap between the two figures is to be expected, as gross receipts usually exceed net benefits. 2 The size of the gap can be meaningful. Generally, the largest contributor to the GPI-GSP gap is the uncounted environmental costs imposed by economic activity on citizens of the state. Vermont's experience here compares favorably to that of other states. A fifty-state GPI study done in 2014, using data current to 2012, found that Vermont had the 16th smallest gap between the two figures.3 Within New England, though, Vermont lagged behind four of its six regional neighbors, edging out New York (22nd) and Connecticut (18th) but standing behind Massachusetts, Rhode Island, New Hampshire and Maine.
- The GPI trend for the years 2013-2015 is positive. The 2015 GPI increase of 7.0% over the 2014 figure is more than triple the growth in GSP. In 2014, GPI grew by 3.6% over 2013, a percentage point higher than GSP growth of 2.6%.
- The results for a longer time period are less salutary. Over the past decade GPI declined slightly, 0.9%, from $19.94 to $19.77 billion. In contrast GSP grew by 8.7% in those years. Among the indicators exerting a downward pressure on GPI over the decade were the Cost of Non-Renewable Energy Resource Depletion (up by $1.1 billion) and the adjustment for income inequality, which rose by $1.8 billion.
- Increasing income inequality is the largest single drag on the GPI. Increases in the total income of Vermonters can't promote the general welfare if they aren’t generally shared. GPI includes a deduction for increasing concentration of income. In 2015, the income adjustment charge was $6.48 billion, up 5.42% over the year before. In the ten years since 2005 the charge has increased 40%. In keeping with national trends, well-to-do Vermonters are seeing their incomes increase while