West Virginia University Report Focuses on Pandemic Recovery, Forecast for years ahead

MORGANTOWN, W.Va. (WV News) — A recently released report from the Bureau of Business and Economic Research at West Virginia University shows the state’s economy continues to rebound from the COVID-19 pandemic.

The report, “West Virginia Economic Outlook 2022-2026,” assesses the challenges the state has faced over the past 18 months, while also forecasting its economic standing over the next few years.

West Virginia lost nearly 94,000 jobs in March and April 2020 at the onset of the pandemic, but had regained nearly 70,000 jobs by the end of the summer, according to the report.

Employment in West Virginia is expected to reach pre-pandemic levels by mid- to late-2022, estimated to increase nearly 0.9% per year on average through 2026, compared to an expectation of 1.4% for the nation.

Some sectors of the state’s economy have seen activity return to what was considered typical prior to the pandemic, but several remain encumbered by supply chain issues, unfilled job openings and worker isolation/quarantines, the report found.

Just 55% of West Virginia’s adult population is either working or looking for work.

“Though an improvement from recent years, this remains the lowest rate of labor force participation among all 50 states and represents a major obstacle to future economic prosperity,” the report says.

The report found the energy sector is an important driver of economic activity in the state.

Coal output fell to its lowest levels in decades during 2020, falling to roughly 60 million short tons. Production has rebounded over the past several quarters, however, and should average in the low- to mid-80-million-ton range during the medium term on the weight of global export demand.

As domestic demand for West Virginia’s coal continues to shrink, the rising reliance on the global coal trade will likely lead to more year-to-year volatility in production going forward.

“Coal will benefit from recovering global demand, but domestic coal use is expected to weigh on output as more coal-fired power plants retire,” the report says.

Natural gas output posted another strong year of growth in 2020, increasing 20%, and has expanded at a double-digit rate since late 2016. West Virginia became the nation’s fifth-highest producing state for natural gas in 2021.

West Virginia’s underlying demographics remain a “major limiting factor” to growth moving forward, according to the report.

The state’s population has declined by nearly 73,000 since 2012. Population losses are expected to be smaller in magnitude going forward.

In order to combat this trend, the report suggests economic development strategies should focus on ways to improve health outcomes, lower drug abuse and advance educational and vocational training opportunities in the state to make West Virginia’s workforce more attractive to potential businesses.

Economic performance is expected to remain extremely variable across West Virginia’s counties in the coming years, the report found.

Nearly two dozen counties are expected to lose jobs or record growth that is less than one-half of the statewide average. The highest rates of job growth tend to be in the northern counties.

While the state overall is expected to lose population in coming years, around 10 counties are expected to add residents during the outlook period. Population gains will be heavily concentrated in North Central West Virginia and the Eastern Panhandle.

“Policymakers should be keenly aware of significant economic differences across West Virginia and ensure that economic development strategies consider each region’s specific strengths and weaknesses,” the report says.

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