CHARLESTON, W.Va. — West Virginia University’s top economist told lawmakers today that the state’s economy is brightening but still has plenty of areas of concern.

John Deskins

Economist John Deskins presented an overview of the state economy on the first day of the legislative session.

He said there are several signs of economic progress including an upswing on total employment, rebounding energy markets and growth in gross domestic product.

But Deskins said West Virginia’s labor participation rate remains concerningly below the national rate. And he added that the state continues to face chronic problems such as opioid addiction and a high obesity rate.

West Virginia will struggle to get per capita income up to the national average if so many potential West Virginia workers are sidelined, Deskins said.

“We have to be able to tell businesses they can find the workers they need in West Virginia,” Deskins told lawmakers.

Deskins shared some signs of recent economic progress in the state. After a period of years where the state lost about 26,000 jobs, there’s been a recent — although partial — bounce-back.

“The good news is, we finally did hit bottom and we have been growing again. We’ve added about 4,500 jobs back since the middle to late 2016,” he said.

Deskins suggested job growth will be slightly below the national average. The expectation at the current pace is it will take to 2021 to get back to West Virginia’s peak employment.

“But that’s not what we’re hoping for. We’d want to see a more rapid bounce-back.”

The state’s rebound has been aided by improvements in energy markets.

Deskins expects coal production will be back up to 90 million tons when final 2017 numbers come out. “What we expect is stability in coal production over the next few years.”

Over the last couple of years, he said, there’s been flatness in gas production compared to surges in prior years. Productive capacity outstripped the infrastructure contributing to a glut, Deskins said.

“Now gas production is growing as well,” Deskins said.

Gas delivery infrastructure is improving, Deskins said. Export of liquefied natural gas has been on the upswing. And the infrastructure to use gas is developing, he says.

Still, he said, Ohio and Pennsylvania production is noticeably ahead of West Virginia. “I don’t know the driver of this,” Deskins acknowledged, saying it’s a vital question.

Although West Virginia’s gross domestic product growth rate has been around the best in the nation over the past half year, Deskins offered a warning sign. He said if you take energy sectors out of the GDP, the remaining sectors are worse.

He said that trend cries out for an effort toward industrial diversification.

“We want energy to continue to be strong and grow, but we must have other industries,” Deskins said.

Deskins expressed some excitement about last fall’s announcement that West Virginia landed a memorandum of understanding with China Energy for up to $83.7 billion in investment.

But he, like most observers, isn’t clear on what investment is ahead.

“How certain are we that we’re going to get $83 billion over the next 20 years? It’s far from certain. But even if it’s half, that would be a game-changer. Even if it’s a quarter, it would be a game-changer. Even if it’s 1/80th it would still be the single largest investment in West Virginia history,” Deskins said.

 

 

 

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