The Register-Herald, Beckley, West Virginia

January 9, 2014

Economic forecast features a mix of good, bad

By Pamela Pritt
Register-Herald Reporter

CHARLESTON — The economic forecast for West Virginia is a mixed bag of good and bad, but perhaps the worst news a West Virginia University professor offered Wednesday is that the prescription drug abuse problem in the state will blunt any economic growth.

“You can’t expect to stay strong economically with the worst drug abuse problem in the country,” Dr. John Deskins from WVU’s Bureau of Business and Economic Research told the joint committee on finance.  

Amid predictions of steady, if somewhat slow population growth, a steady unemployment rate and a steady, if small increase in personal per capita income, Deskins said the economic burden of health disparities are a drain on the economy.

“The direct costs of health care for sicker, disadvantaged populations are high,” he said. “Indirect costs associated with lost productivity, lost wages, absenteeism, family leave and premature death can be avoided.”

However, the reasons for those disparities are “complex,” he said, because of personal behaviors, genetics, environment and socio-economic status, as well as health policy.

All those factors, including drug abuse, play into a morbid statistic.

The state ranks “dead last” in the very worst category for mortality rates, 815.9-949.4 deaths per 100,000 population, Deskins said. Yet another factor in that statistic could be state residents’ lack of time spent in physical activity, which he said is “minimal.”

  There are some good outcomes in terms of health — the state is performing at least as well as the rest of the nation in terms of cancer, diabetes and vaccinations, he said.

“It’s very hard to grow your economy if a significant chunk of your population isn’t at their (most positive), because of unhealthy outcomes and because of prescription drug abuse,” he said.

Other state numbers are not so cheerless.

According to the study done by Deskins and other WVU researchers, employment will continue to see consistent growth at 1 percent annually, but will fall behind the national average in the next four years, after outpacing the nation in employment growth for the last four years.

The study found that government, both state and federal, is the state’s largest employer, followed fairly closely by trade, transportation and utilities. Mining and logging, while responsible for half the job growth in the state, accounts for 4 percent of employment, according to the study.

West Virginia’s unemployment rate has remained fairly steady in the 6 to 7 percent range, the study found.

Natural resources are the third largest sector in the state’s Gross Domestic Product, however.

After an explosion of job growth from oil and gas drilling in the north-central part of the state, natural resources and mining jobs will continue to expand at a slower pace. On the other hand, professional and business services and construction jobs are predicted to grow at nearly 3 percent and about 2.25 percent, respectively.

Coal and petroleum gases are the runaway performer in state exports, with coal the driver behind that fact. West Virginia produces half of all the coal exported from the country, the study found.

Coal production for 2014 will increase slightly over last year, but in 2015, is predicted to begin to drop and then level off at just shy of 60 million short tons a year for the next three years, the study said.

Deskins said those numbers could be affected by many unknowns, including environmental regulations, fierce competition from Midwest states and export markets.

Southern West Virginia coal production has declined over the last two years, to fewer than 34 million short tons annually, while coal fields in northern West Virginia have produced at a maximum of about 43 million short tons in 2011, but still falling to 42 million short tons in 2013.

Per capita income in the state is at about $35,000 annually and $19.50 hourly. West Virginians earn $4 for every $5 earned across the country, or 80 percent of the national average. Still, that number is the highest it’s been since the late 1970s, Deskins pointed out. West Virginia ranks ahead of Mississippi, Idaho and South Carolina, he said.

The state’s population may continue to grow, but the biggest increase will be seen in the oldest population, 65 and up. Prime workforce ages 18-44 are projected to decline in the next four years only slightly less than they have in the last 10.

Deskins said this projection could become a “pressing problem.”

Although state figures for builder optimism were not available, the national outlook has been rising steadily, meaning construction jobs should grow over the next few years.

“Pessimism causes the economy to get worse,” Deskins noted, and single family housing starts in the state are up 23 percent in the last year to about one-third of the peak in 2006.

— E-mail: ppritt@register-herald.com