MORGANTOWN, W.Va. – The state economy stands a good chance of continuing to expand during the next year, but the risks of an economic downturn are high, according to the Mid-Year Review 2001, a study released by the Bureau of Business and Economic Research at West Virginia University.
Series of forecasts. The study is the first of two state forecasts each year and is part of the West Virginia Economic Outlook project, an ongoing series of publications and conferences designed to analyze and forecast the state economy.
“The state outlook calls for continued, but sluggish, growth if the national economy avoids recession,” said George Hammond, director of the West Virginia Economic Outlook and author of the report.
“That translates into a gradually rising standard of living for West Virginia residents but also implies that the state will fall further behind the national economy.”
Last year’s economy. The state economy expanded again last year, adding another year of positive results to a decade of gradual improvement. The state added 9,600 jobs last year, to reach another new high.
The growth rate was slow though, at 1.3 percent for the year, well below growth rates posted in the mid-1990s and well below the national growth rate in 2000 of 2.2 percent.
Per capita personal income rose again in 2000 to $21,915, the unemployment rate dropped again to 5.5 percent, and the state’s population level looks to have stabilized near 1.8 million residents.
Job outlook. The forecasts calls for the state to add jobs at an average annual rate of 1 percent per year during the 2000-2005 period, with the majority of net job growth coming in service-producing sectors such as services, trade and government.
Moderate job gains translate into continued income growth, but national income growth is forecast to exceed state results.
The forecast also calls for the state rate of unemployment to remain near current levels while population holds steady near 1.8 million residents during the next five years.
Recession still threatens. While the outlook calls for continued growth, a national recession in the near term remains a significant risk. Recent Federal Reserve action, combined with mild fiscal policy stimulus, may not be enough to avert national economic declines.
A falling national economy would cloud the state’s outlook, producing slower growth or possibly a recession.
In-state concerns. Hammond also cautioned that the state outlook faces homegrown risks. These relate to some of the largest industries in the state, such as coal mining, chemical products, primary metals and electric power generation.
“Each of these sectors continues to face uncertainty regarding environmental regulation,” Hammond said.
“Further, the chemical products and primary metals sectors face international competitive pressures that may not ease in the short-run.”