MORGANTOWN -– The state economy is expected to slow significantly during the rest of the year and into 2008, driven by weak growth in mining and construction as well as continued job loss in manufacturing, according to the latest forecast from the West Virginia University College of Business and Economics.
The report was issued Nov. 1 at the 14th annual West Virginia Economic Outlook Conference in Charleston.
"The West Virginia economy continued to expand through the first half of 2007, but at a significantly slower rate than the previous year," said George W. Hammond, associate director of the Bureau of Business and Economic Research.
According to preliminary estimates, the state added just 4,700 jobs during the second quarter of 2006 to second quarter of 2007 period. That's well down from the 8,600 jobs added during the mid-2005 to mid-2006 period. The goods-producing sector (mining, construction and manufacturing) lost 1,000 jobs during the past year, while the service-providing sectors combined to generate 5,700 net new jobs.
West Virginia's inflation-adjusted personal income growth hit 2.8 percent during the second quarter of 2006 to second quarter 2007 period.
"That's below the pace of the previous four-quarter period (3.1 percent) and short of the national rate (3.9 percent)," Hammond said.
The outlook for the state economy calls for sustained growth during the next five years, assuming the national economy avoids recession. However, the state forecast calls for modest growth during the next year as the national economy slows in response to the housing correction.
The forecast calls for the state to add only 2,600 jobs on an annual average basis from 2006-07.
"This is dangerously close to no growth and suggests that the state will flirt with recession during the next year," Hammond said.
Continued job growth sets the stage for continued inflation-adjusted wage growth during the next five years. This, in turn, contributes to growth in personal income, which is forecast to average 2.1 percent per year – below the national rate of 2.4 percent per year, but above the average growth during the past five years (1.4 percent).
The expected growth rate difference between the state and the nation implies that the per capita personal income gap will rise during the next five years. The forecast calls for the gap to increase from 23.1 percent in 2006 to 24.8 percent by 2012.
West Virginia's population gains during the forecast are driven by modest net in-migration because the state's rate of natural increase remains negative. Population stability during the forecast implies a continued, gradual aging in place of the state's residents. The implications of this are the population losses in the younger age groups (birth-17 and 18-44) and population gains in the older age groups (45-64 and 65 and older). The 65-and-older age group is forecast to grow the fastest during the next five years, particularly after 2010, as baby boomers begin to reach age 65.
Full details are available in a 50-page publication available from the WVU Bureau of Business and Economic Research for $30 per copy. Contact Erin Carter at 304-293-7884 or email@example.com for more information.