How West Virginia got to 3 percent GDP growth

President Trump is anxious with West Virginia. At a boisterous campaign-style rally Thursday, Trump extolled a state’s clever initial entertain mercantile expansion — expansion he pronounced few expected.


“We had 3 percent expansion in West Virginia. we consternation how that happened,” Trump told entertaining supporters. “Three percent growth. West Virginia is heading a average. When was a final time we listened that?”

And indeed, after years of mercantile stagnation, West Virginia has strung together dual certain buliding in a row: In a final entertain of 2016, a state’s economy stretched during a 1.9 percent annual rate. In a initial entertain of 2017, a sum domestic product grew during a 3 percent annual rate, according to a Bureau of Economic Analysis.

At a same time, West Virginia’s stagnation rate has tumbled, from 6 percent final Jun to 4.6 percent this June, according to a Bureau of Labor Statistics. Only dual states — Wyoming and Indiana — have gifted a faster decrease in their stagnation rates.

Economists always advise about a dangers of reading too many into information from a singular entertain or even uninterrupted quarters. And many contend West Virginia still faces long-term hurdles as a inhabitant and tellurian economy evolves.

But 3 factors are operative in West Virginia’s preference right now: a global infrastructure boom, a rising cost of healthy gas, and a bequest of a retrogression that strike a Mountaineer State harder than most.

While many industries struggled during a recession, a appetite zone indeed achieved comparatively well. States like West Virginia, Texas, North Dakota and Oklahoma gifted income booms as hydraulic fracturing increased a supply of oil and healthy gas. 

And while other industries bled jobs during a mad pace, West Virginia indeed combined mining jobs by even a inlet of a recession: 35,300 West Virginians were employed in a mining and logging attention — a extended zone totalled by a Bureau of Labor Statistics — during a new peak, in Dec 2011.

But West Virginia’s china backing shortly incited to a dim cloud, and as tellurian commodity prices — including spark — fell, so did a state’s vicious mining sector. The series of mining and logging jobs in West Virginia fell by roughly half, to 18,700 in September, before resilient somewhat to 22,000 today. 

In other words, while other states strike mercantile bottom in 2010 or 2011, West Virginia didn’t knowledge a possess underside until many later. Between 2012 and 2016, a state gifted an roughly wholly prosaic economy, when accounting for inflation. 

“We have not seen expansion in GDP for a final 5 years,” pronounced John Deskins, executive of a Bureau of Business and Economic Research during West Virginia University. “We’re starting from a tiny base. The fact that we haven’t grown in 5 years means a bottom is small.”

Any mercantile expansion is going to be exaggerated, some economists said, since a state was starting from such a low point. The same expansion in a state where a economy was already some-more clever would lead to a smaller altogether GDP increase.

The tellurian infrastructure bang has helped build on that base, generally in new months. The normal cost of a ton of metallurgical spark — a product used in creation steel — has some-more than doubled, from a low of $68.36 in a initial entertain of 2016 to $152.96 today. At a same time, spark prolongation in West Virginia has jumped 31 percent over only a final year, and spark practice is adult 10 percent.

That means West Virginia is producing some-more of a product during a time a cost is rising, and contracting some-more people to do so — all mixture required for a flourishing GDP.

“We’re saying a some-more clever economy. We felt that a economy was substantially going to bottom out in a 2015, 2016 period. It did,” pronounced Steve Roberts, boss of a West Virginia Chamber of Commerce.

It’s not only spark that’s assisting boost West Virginia’s economy, Deskins said. The cost of healthy gas exports has also risen in new months, from a low of $2.04 per thousand cubic feet in Mar 2016 to $3.57 per thousand cubic feet in May, according to a U.S. Energy Information Administration.

Those prices are rising as other countries spin from oil and spark to healthy gas to fuel their electric grids. The U.S. exports about half a healthy gas to Mexico, about a entertain to Canada and another entertain to other nations around a world.

And that helps West Virginia in dual ways: First, a state produces about 5 percent of a nation’s healthy gas, that means a aloft cost helps West Virginia some-more than many other states. Only 8 other states — Texas, Alaska, Colorado, Louisiana, Ohio, Oklahoma, Pennsylvania and Wyoming — furnish some-more healthy gas than does West Virginia.

Second, aloft prices for healthy gas creates spark some-more attractive, and some-more rival on a tellurian market, Deskins said. Where reduce healthy gas prices once harm a spark industry, aloft prices are now helping.

“As appetite has improved, West Virginia has improved,” Deskins said.

Other states heavily reliant on appetite prolongation also gifted clever mercantile expansion in a initial quarter, after years in that descending commodity prices took their fee on state budgets. 

Among a strongest-performing states in Trump’s initial entertain as president: Texas, that grew during an annual rate of 3.9 percent; New Mexico, that notched a 2.8 percent GDP boost; and Alaska and North Dakota, that both came in with an annual expansion rate of scarcely 2 percent, after years of decline.

“This reflects a distinct strike in mining,” pronounced Mark Muro, a comparison associate during a Brookings Institution’s Metropolitan Policy Project. “There has been a medium ‘Trump bump’ on this front.”

Roberts, who heads a West Virginia Chamber of Commerce, gave credit for partial of a state’s quip to a Trump administration.

“At slightest partial of this is an administration that is emphasizing things that are good for West Virginia — energy production, manufacturing,” he said. Roberts also pronounced a Trump administration’s concentration on slicing regulatory red fasten has given appetite companies inducement to grow more.

But a categorical motorist of West Virginia’s growth, rising tellurian prices, is wholly out of Trump’s control. No boss is absolute adequate to impact a cost of a ton of metallurgical spark or a cubic feet of healthy gas on a general market.

Despite a clever quarter, West Virginia still faces steeper demographic and mercantile challenges.

The median age of a West Virginia proprietor is 42.2 years old, comparison than all though 3 New England states; an comparison race both works reduction and relies on amicable services like medical more. More than one in 6 state residents live next a misery line, aloft than all though 7 states. 

And so many of West Virginia’s economy is contingent on spark and gas mining that economists worry that another commodity unemployment would send a state right behind down to a inlet of a new recession.

“No matter what happens to coal, West Virginia desperately needs industrial diversification,” Deskins said. “We desperately need to see larger strength in tourism, or manufacturing, or other sectors.”


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