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Morgantown area to continue expanding; job growth to slow

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MORGANTOWN, WV -

The Morgantown area's economic expansion is expected to continue, though with less aggressive job growth over the next few years.

That's according to the latest forecast from the West Virginia University College of Business and Economics, released March 19 at the college's annual Morgantown MSA Economic Outlook Conference.

"Uncertainty in the global and national economies will have an effect on West Virginia's growth, but less of an impact on the local economy," said Paul Speaker, an associate professor of finance and spokesperson for the college's Bureau of Business and Economic Research. "We expect a continuation of the past decade's growth in the local economy, but at a slightly slower pace."

Speaker first reviewed some aspects of the state economy.

Demographically, West Virginia has the third-oldest population in the nation, with the over-65 population continuing to grow as is regularly predicted. The state is 43rd among states in the share of people with a high school diploma, and last in the share of people with a bachelor's degree — pointing to the huge opportunity the state has in education, Speaker said.

As is historically the case, the state's economy did not suffer as much as the nation's during the recent recession. The energy sector helped moderate the state's economy during the recession and since.

Speaker noted a signpost of West Virginia as an "energy state." Comparing gross state product with national gross domestic product, 14 percent of the state's economy is in natural resources and mining, compared with 2 percent nationally. While the leisure and hospitality sector also gets a lot of attention for employment and growth, he said, the wages are far lower than in the energy industry.

However, the employment growth forecast shows jobs in natural resources and mining jobs declining slightly over the coming several years, while growth is expected in education and health services, manufacturing, professional and business services, and construction.

Gross state product is expected to grow 2 percent on average through 2017. Employment should grow about 1 percent per year, with unemployment falling to about 5.6 percent by 2017. Personal income is expected to rise at 2.2 percent per year.

Growth continues to vary widely across the state: slow and in some cases negative in counties in the southern part of the state and in the northern panhandle; steady in the eastern panhandle and north-central counties.

"Morgantown and all of north-central West Virginia have been a bright spot," Speaker said.

The Morgantown Metropolitan Statistical Area — Monongalia and Preston counties — experienced an average annual growth in output of 3.4 percent over the past several years, including a 2012 growth rate of 6.7 percent.

The median age in the Morgantown MSA is 32.4 years, compared with 41.3 statewide, due in large part to the high student population, Speaker said. Real per capita income in the MSA is $30,910 per year, in 2005 dollars, but the high salaries in, for example, health care are brought down in the average by that student population. The statewide average is $29,360.

In the Morgantown MSA, 28 percent of employment is in government, compared with 20 percent statewide and 12 percent nationally. "We are heavily dependent on the government sector," Speaker said, noting especially the federal government jobs at, for example, the National Energy Research Laboratory and National Institute for Occupational Safety and Health in Morgantown. With federal budget sequestration, that points to some vulnerabilities, he said.

Looking ahead, employment growth in the Morgantown area will be especially strong in professional and business services, with growth also expected in construction, education and health services, and manufacturing.

"Sustained job growth during the forecast translates into a gradually declining unemployment rate during the next five years," said Speaker. "The Morgantown MSA already boasts one of the lowest unemployment rates in the state and well below the national average. We project the Morgantown unemployment rate to continue to fall through the end of our forecast period in 2017."

Population is expected to grow 1.2 percent per year in the Morgantown MSA through 2017, compared with 0.2 percent statewide. Per capita personal income is expected to grow 1.6 percent per year — lower than the state's 2.2 percent.

Full details are available in the final report, which may be downloaded from the WVU Bureau of Business and Economic Research's website.