New subject: [App. Gas Working Grp.] WV Economic Growth (?) and Natural Gas

17 Aug 2018


      Ted Boettner, Dean Baker: Is WV's economic 'comeback' real? (Gazette
Opinion)
- By Ted Boettner and Dean Baker
   - 10 hrs ago
   -  (0)
   https://www.wvgazettemail.com/opinion/gazette_opinion/op_ed_commentaries/ted-boettner-dean-baker-is-wv-s-economic-comeback-real/article_8e25bc5a-b5e5-502c-adaf-f1048f726c77.html#comments
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Over the last few months there has been a flurry of op-eds and articles
from big corporations and Republican lawmakers arguing that state budget
cuts and low-wage policies like “Right-to-Work” are resulting in a booming
economy in our state. Some have gone so far to say West Virginia is
“America’s Comeback Kid.” West Virginia’s economy is growing in some
sectors — most notably natural gas — but it is performing poorly compared
to other states and has yet to recover from the Great Recession that begin
more than 10 years ago.
Let’s dig into the numbers.
First, let’s look at our economic recovery from the Great Recession, which
began in December 2007 and officially ended in June of 2009. Altogether,
West Virginia has about 9,000 fewer jobs and has seen its labor force
shrink by 34,000 from December 2007 to June 2018. Only one other state in
the country (Wyoming, another energy state) has had slower job growth over
this period. West Virginia also had a larger reduction in its workforce
than any other state.
The state’s economic growth – or change in real (inflation adjusted) Gross
Domestic Product (GDP) – was about 9.1 percent from 2007 to 2017, less than
1 percent annually, compared to the U.S. average of 13 percent. Meanwhile,
West Virginia is one of 13 states with an unemployment rate higher today
than at the start of the Great Recession. As of June 2018, West Virginia
had the third highest unemployment rate in the nation at 5.3 percent.
Over the last year, employment has grown by 0.9 percent in the Mountain
State, which was below the U.S. average and slower than most states. While
West Virginia’s real GDP over the last two years has grown relatively fast
compared to other states, this is almost entirely fueled by the rise in
natural gas prices, which have grown by about 66 percent or $1 per thousand
cubic feet over the last two years. The rise in natural gas prices has
unleashed a pipeline building construction boom along with more natural gas
production – growing from 1.3 trillion to 1.6 trillion cubic feet of
production over the last two years.
West Virginia’s real GDP grew by $1.8 billion over the last year. However,
$1.4 billion or 78 percent of this growth was from the mining sector that
includes natural gas extraction, coal mining, and other mining. The growth
in natural gas extraction and metallurgical coal production is not only the
central reason for the strong GDP growth over this period but it is mostly
likely responsible for West Virginia’s relative strong earnings growth over
the last year.
This means that West Virginia’s politicians can’t really take credit for
the growth of the last two years, unless they want to claim responsibility
for the jump in world energy prices that gave us $3.00 a gallon gas. The
loss of oil exports from Venezuela and Iran has far more to do with recent
growth than the end of “Obama’s war on coal”
While state and local public policy can impact economic growth – especially
over the long-run (think infrastructure, education, higher education) – its
effects are typically small in the short run outside of a burst of deficit
spending (which has to be paid back over the medium-run) or a big infusion
of federal money. For example, the expansion of Medicaid to working adults
has increased federal spending in West Virginia by $900 million per year
while the Trump tax cuts — that mostly go to the wealthy — will cut taxes
by over $1 billion per year in West Virginia.
Other factors that play a big role in state economic growth are climate,
proximity to national markets, energy prices, the availability of raw
materials and natural resources, and the composition of each state’s
economy. The state is also largely at the mercy of national and global
economic trends, such as economic recessions caused by housing and tech
bubbles, or tight monetary policy through interest-rate hikes. Most people
and businesses look for a good quality of life, sound infrastructure,
world-class schools, and a place where they can make money.
While jobs and our labor market are beginning to rebound, it is important
that we have a clear understanding of the evidence and data before
asserting that state or federal policies over the last several years are
responsible for the recent economic growth. West Virginia’s economy still
has a long way to go before it gets back to where it was over a decade ago
and most of our economic growth is tied up in volatile industries where the
benefits largely go out of state and the work is insecure.
Over the last decade, most West Virginia households have seen no income
gains from the state’s economic growth. If policymakers want to grow the
state’s economy so it benefits everyone, not just a few, they will need to
put more money, power, and skills in the hands of working families. This
could include targeted tax cuts for low-income families, investing more in
higher education and public broadband, raising the minimum wage, paid sick
days for all, using severance taxes to build a sustainable future, and
creating a paid family leave program. These policies not only keep more
money inside our state, but they also provide a foundation for broader
growth and prosperity.
Ted Boettner is the Executive Director of the West Virginia Center on
Budget and Policy and Dean Baker is a Senior Economist at the Center for
Economic and Policy Research in Washington, DC.
William V. DePaulo, Esq.
860 Court Street, North  Suite 300
Lewisburg, WV 24901
Tel 304-342-5588
Fax 866-850-1501
william.depaulo@gmail.com