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Economic Snapshot
JOHN DESKINS
Understanding
West Virginia’s Economy
West Virginia’s economy enjoyed its strongest year of growth
in nearly a decade during 2017, emerging from several years of
economic weakness that also included a significant recession
that spanned the second half of 2015 and first half of 2016.
Most of the bounceback in the state’s economy is connected to
the energy sector, not only from the increased extraction pro-
duction of coal and natural gas but also as a result of a massive
build-out of new natural gas pipeline infrastructure through-
out the state. While growth has broadened to include more of
the state’s regions over the past year or so, the overall magnitude
of gains in jobs and output have remained concentrated in
just a few areas as some portions of West Virginia continue
to struggle with a range of weak economic fundamentals.
During the recent Economic Outlook Conference Series,
hosted by the West Virginia University John Chambers College
of Business & Economics, key information in understanding
West Virginia’s economy was provided along with a presenta-
tion of bright spots and areas of caution. This snapshot of the
recent economic update and forecast will provide insight into
what is driving industry success and what employers—partic-
ularly in those industries—can expect over the next few years.
An Upswing in Energy
Just as the state has experienced in most previous business
cycles, changes in energy production have been a key compo-
nent in determining the depths or heights of the state’s economic
performance. Overall, the coal and natural gas industries
combined account for more than 16,000 of the 23,000 jobs
lost statewide between early 2012 and mid-2016.
Since late 2016, however, the industry’s performance has
improved measurably as production and payrolls have increased
West Virginia Employment Distribution by Sector
Natural Resources & Mining
3%
Other Services Informa on
1%
3%
Financial Ac vi es
3%
Construc on
5%
Government
20%
Manufacturing
7%
Professional & Business
Services
10%
Trade, Transporta on &
U li es
19%
Leisure & Hospitality
11%
Educa on & Health Services
18%
SOURCE: U.S. Bureau of Labor Statistics
in both of the state’s coal-producing regions. Given that coal
continues to face significant challenges in the U.S. from nat-
ural gas and additional retirements of coal-fired generators,
northern West Virginia has experienced a noticeably smaller
bounceback in activity. Southern West Virginia production and
employment have recovered to a greater extent as global export
demand has surged for both metallurgical and thermal coal.
Just as conditions within the coal industry have improved,
market conditions have firmed significantly for the natural
gas industry since early 2017 as demand has continued to
increase both domestically and internationally, and new pipe-
line infrastructure in the Mid-Atlantic is alleviating supply
bottlenecks. After increasing 17 percent in 2017, production
during the first half of 2018 increased an estimated 16 per-
cent on a year-over-year basis. The payrolls for drilling and
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