WVU economist: State in midst of ‘uneven recovery’

An economist at West Virginia University said some areas of West Virginia are seeing healthy growth, while others continue to experience economic weaknesses and population loss.

John Deskins, economist and director of WVU’s Bureau of Business and Economic Research, called West Virginia “a picture of an uneven economic recovery” at the statewide Economic Outlook Conference in Charleston today (Oct.3). The annual economic forecast event takes a look at the West Virginia economy for the next five years, incorporating data and trends into its outlook.

Deskins said that the five-year study, titled “West Virginia Economic Outlook 2019-2023,” explained that a few regions of the state are seeing economic and population growth, while the remaining areas are suffering from little, if any, positive economic development, socioeconomic disadvantages and a decline in residents.

“This uneven recovery shows substantial differences in the various regions of our state,” said the head of BBER, which operates in WVU’s College of Business and Economics. “That is the snapshot of West Virginia, where a few areas are prospering, but many are not.”

The study showed that the highest rates of job growth tend to be in the northern half of the state, and that population gains will be heavily concentrated in North Central West Virginia and the Eastern Panhandle. “While the state overall is expected to lose population in coming years,” the study read, “around a dozen counties are expected to add residents and several more are expected to remain generally stable.”

In terms of economic sectors, the natural gas, manufacturing and construction industries are expected to be the top performers in West Virginia’s economy in the near future.

“We anticipate slightly positive growth overall in energy over the forecast horizon,” the outlook said. “This growth will be driven by the natural gas industry. Construction is expected to add jobs at the fastest rate going forward, with much of the job growth occurring early in the forecast horizon due to natural gas pipeline construction. In the middle part of the forecast horizon, construction employment growth will be driven in part by public infrastructure investments. Manufacturing is expected to add jobs at an above-average rate over the forecast horizon, in large part due to gains in chemicals, automotive components and aerospace equipment.”

The annual report looked at specific elements of the economy, which often represented groups of residents. For example, job growth since late 2016 has been heavily concentrated in only eight counties, and has been largely driven by growth in energy industries. Six counties are expected to lose jobs in the forecast time period, and the fastest growing segment of income is non-wage income, such as Social Security benefits.

“There are some real positives in this report, and we shouldn’t lose sight of that,” Deskins said. “At the same time, we have some real challenges, and this state is going to have to roll up its sleeves to address them. Now.”

On the positive front, West Virginia’s jobless rate is expected to improve over the forecast period. The state’s real Gross Domestic Product grew at a healthy pace in 2017, outpacing more than 40 other states, with growth largely driven by energy-related developments. Exports also play a key role in West Virginia’s economic picture.

“Export activity from West Virginia has been quite volatile over the past decade. Exports have increased at a healthy rate since late 2016. Promoting the state’s export potential is of vital importance to economic development in West Virginia in the long run,” the report said.

According to a separate study titled “Coal Production in West Virginia: 2018-2040” released in August, “The state’s coal output is expected to moderate over the next two years before seeing persistent production declines take hold over the next two decades.” Conversely, natural gas output has exhibited strong growth since late 2016, and production is expected to continue to grow at a healthy rate over the five-year forecast period. A comprehensive report on West Virginia’s natural gas industry is expected from the BBER later this fall.

“West Virginia’s economy enjoyed its strongest year of growth in nearly a decade during 2017, emerging from several years of severe economic weakness. Most of the bounce-back in the state’s economy is connected to the energy sector, not only from the increased production of coal and natural gas, but also as a result of a massive build-out of new natural gas pipeline infrastructure throughout the state,” read the study. “Growth has broadened to include more of the state’s regions over the past year or so, but the overall magnitude of gains in jobs and output have remained concentrated in just a few areas as some portions of West Virginia continue to struggle with a range of weak economic fundamentals.”

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