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Forecast says state will continue to pull out of Great Recession

CHARLESTON, W.Va. -- The state continues to pull out of the Great Recession but employment isn't expected to reach pre-recession levels until next year, according to the 2013 West Virginia Economic Outlook.

Paul Speaker, associate professor of finance and adjunct professor of economics at West Virginia University, presented the forecast Thursday at the 19th annual outlook conference, presented by WVU's College of Business and Economics at the Civic Center.

Among the other presenters was Mark Muchow, deputy secretary of the state Department of Revenue.

Some of the outlook's key findings:

* The state added 12,600 jobs between 2010 and 2011 and by January came within 400 jobs of matching the state's pre-recession employment level.

* Weakness in the energy sector resulted in a substantial drop in mining employment in the second and third quarters of this year. The number of employees in the natural resources and mining sector is forecast to decline 1.7 percent annually through 2017.

* The construction sector is expected to grow by 5.1 percent annually through 2017, led by an increasing demand for residential housing.

* Health care is forecast to record strong gains as the demand for health services increases with the state's aging population.

* Leisure and hospitality should see gains, in part because of the opening of the Summit Bechtel Family National Scout Reserve in Raleigh County.

* The new Macy's distribution center in Martinsburg and the new Cabela's store in Charleston are expected to boost the wholesale and retail trade sectors.

* The state's unemployment rate is expected to decline from 7.5 percent in October to 5.6 percent in 2017.

* West Virginia's population is forecast to increase 0.3 percent per year through 2017 -- the same rate recorded over the past five years. "Most of the increase will be due to in-migration," Speaker said.

Muchow said the state faces energy headwinds, with coal production down by more than 7 percent so far this year and mining employment down by more than 5,000.

Although natural gas production rose 37 percent in 2011 and is up another 15 percent this year, the natural gas sector of the state economy is much smaller than the coal sector.

Speaker and Muchow both stressed the important role exports play in the state's economy. Muchow said coal exports are slowing as other economies around the globe slow down. He also pointed out that 15.4 percent of the coal-fired power generation capacity in West Virginia is being retired.

The state faces numerous financial challenges, Muchow said. "One third of the state budget comes from federal revenues," and it is widely anticipated that the federal government is going to cut back funding of some programs.

As for state revenues, Muchow pointed out that lottery revenue peaked in 2007 and the state faces increasing competition from neighboring states like Maryland, where voters agreed earlier this month to allow table games.

The state's general revenue fund also is expected to take a hit as energy-related revenues decline, Muchow said. For example, the amount of severance tax collected during the four months ended Nov. 1, 2012, totaled $197.5 million. The amount collected during the four months ended Nov. 1, 2012, was $153.2 million -- 22.4 percent less.

For 17 years, George Hammond presented the state economic outlook. But earlier this year Hammond took a position at the University of Arizona. Muchow recalled that at the end of his presentations, Hammond enjoyed characterizing the outlook on a scale with ice cream at one end and a stiff drink at the other.

Muchow said that in keeping with Hammond's tradition, he would characterize the outlook this year.

"I'd go with a stiff drink," he said. More information about the outlook is posted on the College of Business and Economics' website at

Contact writer George Hohmann at or 304-348-4836.



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