By Stephen Smoot
The 21st century has seen parts, but not all, of West Virginia enjoying economic expansion and opportunity. Headwinds from national economic problems and federal overregulation of key industries have prevented the ship from sailing smoothly.
Potomac Highlands counties, according to the economic outlook for the region, could appear as a microcosm for the rest of the state. Certain regions and industries will grow while others may not.
It’s important to realize, however, that growth outlooks have as much predictive power as previews for West Virginia’s next football season. Any number of variables on the national, state, or local level could make actual events depart from what is predicted – or even expected.
The outlook, prepared by professor John Deskins of the West Virginia University Bureau of Business and Economic Research, starts with the big picture of the economy across the United States.
“We expect continued growth in the nation, albeit slow growth,” the outlook forecast.
That growth should come in the context of inflation rates that will approximate the targeted range, just under two percent, continuing to drop significantly this year. Overall, for the foreseeable future, inflation is expected to remain steady at around that rate.
Inflation, in economic terms, means “too many dollars chasing too few goods.” Enormous amounts of money pumped into the economy during COVID distended the economy considerably and the past year has seen strong improvements.
Small levels of inflation will occur as a byproduct of economic growth as well.
One of the factors bringing down inflation has come in the rise of interest rates. The Federal Reserve sets the prime interest rate at which banks may borrow from it if needed. All credit at interest adds their own rate to the prime rate to allow for profit. Higher interest rates mean a higher cost of getting credit, which has the effect of reducing inflation, but also tempering economic growth.
Within that national context, West Virginia faces both significant challenges and opportunities. One of the biggest challenges lies in geographically diversifying state growth into areas besides the axis of expansion extending between Jefferson County and the North Central region.
The past four years in both the state and the nation have seen employment gradually increase from the COVID disaster. Employment in West Virginia has returned to numbers last seen during President Donald Trump’s first term. State performance has been solid, but also trailed behind national growth.
Both the state and nation, however, currently have unemployment rates at just more than four percent, a condition once called “full employment.” With West Virginia’s workforce participation at 49th in the nation, however, the state has many who can fill the needed and vital open positions in most areas, but for various reasons choose to forego employment.
The state has strong reasons for optimism as Governor Patrick Morrisey’s economic development priorities dovetail with those of Trump. The top five economic sectors in terms of salaries are utilities, mining/oil/gas extraction. wholesale trade, finance/insurance, and manufacturing.
Trump intends to maximize American energy growth and development, especially in areas such as coal, natural gas, and oil. That should expand opportunities in fields that both pay well and exist in areas around the state.
Energy production could also extend into the Potomac Highlands region, specifically if Potomac Valley Transit Authority receives support for their grant supported plan envisioning a local hydrogen fuel production hub.
During the past 10 years, West Virginia has seen strong growth concentrated in 15 counties mostly in eastern and northern West Virginia with Wirt, Jackson, and Putnam also enjoying natural gas fueled expansion. In the Potomac Highlands, Mineral, Hampshire, and Hardy saw the strongest economic development numbers.
Potomac Highlands counties narrowly outstripped the state in total employment numbers during the past year.
The top 15 counties saw just under 20,000 added jobs while the rest of the state lost approximately 26,000. Mineral County led the region, followed by both Hardy and Hampshire, but Grant and Pendleton saw economic contraction in the same period. The outlook predicts that Mineral and Pendleton will see declining economic numbers between 2024 and 2029 with Hardy and Grant seen as the potential regional growth leaders.
Pendleton County, among Potomac Highlands counties, has both the lowest unemployment rate at 2.3 percent and also the lowest total employment, with approximately 1,000 officially tallied jobs. That, of course, does not count the contributions of family members to farm operations and other positions not counted as official jobs.
Also, the county has a labor force participation of 51.5 percent, two points under the state’s overall rate.
In per capital personal income, however, Pendleton County leads the region at slightly less than $60,000 per year. This outstrips West Virginia, whose rate sits at approximately $55,000. All other Potomac Highlands counties fall beneath that level.
