By Stephen Smoot
The 21st century has seen parts, but not all, of West Virginia enjoying economic expansion and opportunity. Headwinds from national economic problems and federal overregulation of key industries have prevented the ship from sailing smoothly.
It’s important to realize, however, that growth outlooks have as much predictive power as previews for West Virginia’s next football season. Any number of variables on the national, state, or local level could make actual events depart from what is predicted – or even expected.
The outlook, prepared by Professor John Deskins of the West Virginia University Bureau of Business and Economic Research, starts with the big picture of the economy across the United States.
“We expect continued growth in the nation, albeit slow growth,” the outlook forecast.
That growth should come in the context of inflation rates that will approximate the targeted range, just under two percent, continuing to drop significantly this year. Overall, for the foreseeable future, inflation is expected to remain steady at around that rate.
Inflation, in economic terms, means “too many dollars chasing too few goods.” Enormous amounts of money pumped into the economy during COVID distended the economy considerably and the past year has seen strong improvements.
Small levels of inflation will occur as a byproduct of economic growth as well.
One of the factors bringing down inflation has come in the rise of interest rates. The Federal Reserve sets the prime interest rate at which banks may borrow from it if needed. All credit at interest adds their own rate to the prime rate to allow for profit. Higher interest rates mean a higher cost of getting credit, which has the effect of reducing inflation, but also tempering economic growth.
Within that national context, West Virginia faces both significant challenges and opportunities. One of the biggest challenges lies in geographically diversifying state growth into areas besides the axis of expansion extending between Jefferson County and the North Central region.
The past four years in both the state and the nation have seen employment gradually increase from the COVID disaster. Employment in West Virginia has returned to numbers last seen during President Donald Trump’s first term. State performance has been solid, but also trailed behind national growth.
Both the state and nation, however, currently have unemployment rates at just over four percent, a condition once called “full employment.” With West Virginia’s workforce participation at 49th in the nation, however, the state has many who can fill the needed and vital open positions in most areas, but for various reasons choose to forego employment.
The state has strong reasons for optimism as Governor Patrick Morrisey’s economic development priorities dovetail with those of President Trump. The top five economic sectors in terms of salaries are utilities, mining/oil/gas extraction. wholesale trade, finance/insurance, and manufacturing.
Trump intends to maximize American energy growth and development, especially in areas such as coal, natural gas, and oil. That should expand opportunities in fields that both pay well and exist in areas around the state.
Both the gas fields of Northern and North Central West Virginia and the coal bearing lands there and in the southern counties will hopefully benefit and see growth.
Over the past 10 years, West Virginia has seen strong growth concentrated in 15 counties mostly in eastern and northern West Virginia with Wirt, Jackson, and Putnam also enjoying natural gas fueled expansion.
