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WVU briefs lawmakers on outlook

CHARLESTON — Lawmakers Wednesday morning received an economic outlook for the state from the director of the West Virginia University Bureau of Business and Economic Research at the John Chambers College of Business and Economics.

“We expect the economy to continue to grow out of the recession that we suffered from 2012 through 2016,” John Deskins said. “We want to celebrate that growth, but we still have to focus on getting the growth to broaden out.”

West Virginia saw its best year of economic growth in more than a decade in 2018 driven by the energy sector, but job growth has been concentrated in just seven counties due to pipeline construction, the natural gas industry and coal mining. More than 10,000 jobs were added in those counties over the last three years, but the remaining 48 counties have only added 500 jobs during the same period.

Unemployment has trended lower, but the workforce participation rate of 54 percent still remains the lowest of all 50 states.

The national workforce participation rate is 63 percent.

“We can never be where we want to be or achieve economic prosperity that’s on par with the rest of the nation if we have 9 percent of our adult population sitting on the sidelines compared to the national figures,” Deskin said. “We have to figure out ways to get our people in the workforce if we’re ever going to achieve the level of economic prosperity that we hope for.”

Per capita personal income growth has been a bright spot, increasing 5.5 percent in 2018 and outpacing growth in all other states, currently standing at an estimated 77 percent of the national average. Real gross domestic product growth rose 2.4 percent in 2018, but again was driven by growth of natural gas and pipeline construction.

“A big part of the boost that we’ve seen here in terms of the growth of the past two and a half to three years has been natural gas pipeline construction jobs,” Deskins said. “A lot of those jobs have finished. A lot of the jobs are just done.”

Projections for the next five years ending in 2024 show modest growth in employment, real GDP and personal income, as well as a slight decrease in average unemployment. It’s the state’s population growth, or lack thereof, that will continue decreasing at a rate of .2 percent annually over the next five years.

Deskins was asked about the affect removing the business and inventory tax on manufacturing machinery and equipment, a goal of Republican legislators this session. Deskins said it’s hard to project how much manufacturing growth would result from repealing the tax.

“That’s really, really hard to do,” Deskins said. “You want to tax a base that immobile, something you can’t just move across the state line easily…a business and inventory tax is actually one of the most mobile bases you can imagine. If we’re thinking about a manufacturing firm’s warehouse, are they going to have their warehouse in the Wheeling area or are they going have it across the river in Belmont County, Ohio? It’s so easy for them to move their warehouse across the river one mile away to avoid that tax.”

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