State economic forecast: Growth, but slower than national average

By The West Virginia Record | Nov 15, 2006

CHARLESTON – West Virginia's economy is expected to continue growing over the next five years, but at a slower pace than national economic growth, according to the author of a new forecast of the state's economy.

George Hammond, research associate professor in the West Virginia University College of Business and Economics, released his forecast for the state's economy at the 13th annual West Virginia Economic Outlook Conference in Charleston on Nov. 15.

"Overall, it calls for slow growth, but continued growth," Hammond said of his forecast.

Hammond said that slower growth in the mining and construction industries in West Virginia will contribute to the slowdown he predicts for the economy. Over the past three years the state's economy has grown by nearly 27,000 jobs and nearly half of those new jobs came in the natural resources, mining and construction fields.

Over the next five years, Hammond forecasts little or no growth in the natural resources and mining sector and only small growth in the construction sector. Coal mining jobs are forecast to stabilize between 17,000 and 19,000 jobs during the next five years, as coal production hits 159 million tons before stabilizing at 156 million tons by the end of the forecast.

Hammond said that he expects job growth in the state to be strongest in the service producing sector, primarily the health care field, over the next five years.

Hammond also predicted job growth in the hospitality and tourism sector, but tempered that prediction somewhat with the recent news that the state of Pennsylvania now offers gambling in the form of video slot machines. He said that could cut into the tourism sector in the state's Northern Panhandle where two racetracks currently offer video slot machines.

The state's beleaguered manufacturing sector, which has seen 3,300 jobs lost in the past three years, should see slower job losses in the next five years, Hammond said. Some segments of the manufacturing community, like transportation equipment, should actually see job growth over the next five years, he added.

Overall, Hammond predicted annual job growth in West Virginia for the next five years of 0.9 percent. Nationally, job growth is expected to be 1.2 percent during the same time period.

At the same time job growth in West Virginia is expected to lag that of the nation, per capita income in the Mountain State is also expected to fall behind national growth rates. Over the next five years, nationwide, per capita income is expected to grow by 2.8 percent per year, while in West Virginia the growth in per capita income is forecast to be 2.2 percent.

Hammond also talked about the state's population which has remained relatively stagnant at 1.8 million people. From 2000-2005 the state's population only grew by 9,414 people, with most of that growth being driven by new residents moving into the Eastern Panhandle. Berkeley County alone grew by 17,000 people during that time, while Kanawha County lost 6,000 people.

Hammond predicted that over the next five years West Virginia would only add another 9,000 residents, giving it an annual population growth rate of 0.1 percent, which is also below the expected national average for growth of 0.9 percent a year.

At the same time the size of the state's population remains relatively unchanged, it is aging rapidly, Hammond said. Over the next five years the number of people in West Virginia under age 44 will continue to decline, while the number over age 45 will continue to grow at a steady pace. After 2011 as baby boomers begin to retire the state's work force will face some challenges, he said.

The 13th annual West Virginia Economic Outlook Conference was held at Charleston's Embassy Suites hotel and drew a crowd of nearly 200 people.

The event was sponsored by the Bureau of Business and Economic Research at West Virginia University, as well as, Appalachian Power, the Chambers Endowed Program for Electronic Business, Charles Ryan Associates, The Charleston Daily Mail, The Charleston Gazette, Chesapeake Energy, Citigroup Global Markets, Crews & Associates, Ferris Baker Watts, The State Journal and the West Virginia Department of Revenue.

Copies of Hammond's full 50-page forecast are available from the Bureau of Business and Economic Research for $30 per copy. For more information, contact Patricia McDade at 304-293-7831 or via e-mail at

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