|West Virginia Economic Outlook 2012|
|Tuesday, 01 November 2011 00:00|
The 18th annual West Virginia Economic Outlook Conference was held in November, sponsored by the WVU College of Business and Economics. This forum attracts a large audience interested in hearing what the experts say about the forecast for the national and state economy.
This year, Associate Director George Hammond of the WVU Bureau of Business and Economic Research gave his annual “comfort food index” of the economy, saying that WV is going towards the ice cream end of the spectrum but keep a good stiff drink handy!
There was good news in the manufacturing sector which has been in decline for several years but saw slight growth this year. Most of WV’s job growth has been in the Education, Health, and Professional and Business Services categories. Coal production is far below pre-recession levels for several reasons challenging geological conditions for mining, and increased scrutiny of mountaintop removal permits. On the other hand, natural gas activity is expected to offset losses in the coal industry.
The eastern panhandle is the only area in WV that saw the boom and bust in the housing cycle, with 85% of the state’s foreclosures occurring there. As far as job changes by county, Hammond noted, “West Virginia is a set of relatively small, highly diverse economies. Kanawha County saw the largest job growth in 2011 whereas in the past several years it has been on the other end of the scale. Berkeley
County experienced the most job loss, mostly in professional services and government, and like
Kanawha County it has usually been at the opposite end of the chart. In addition to
Kanawha County, Greenbrier, Raleigh, Jefferson and Harrison all experienced solid job growth.
West Virginia’s dominant demographic trend is the baby boomer transition to the 65-and-older age group. As they retire, the labor market impact will create job openings. This may put an including power plant regulations, competition from natural gas, increasingly upward pressure on wages as there is a shortage of educated young people to fill many of these jobs. At 54.4%, West Virginia has the lowest labor participation rate in the country, or in other words the highest number of people who are not counted in the labor force.
Deputy Secretary of Revenue Mark Muchow explained that the two most important words in WV’s forecast are “uncertainty and unknown.” There is concern about the loss of property taxes to local government because two power plants are scheduled to close. Severance tax is now
11% of our state’s general revenue and lottery income is no longer a source of significant growth in state revenue. He described the next couple of years as a “fiscal rollercoaster” due to increased revenue volatility (severance and income taxes), lack of certainty at the federal level, and mounting budgetary pressures in Medicaid, highways, and corrections programs.