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John Chambers College of
Business and Economics
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Executive Summary

The West Virginia economy is currently growing and the probability of a national or state recession is low. However, our West Virginia forecast calls for weak employment growth over the coming five years. While the state has enjoyed some important economic development announcements and initiatives in recent years and has strong potential in some areas, the state faces major demographic challenges, and many counties or regions of the state continue to struggle to create positive momentum. Overall, this report provides a foundation to understand West Virginia’s long-run economic challenges and opportunities.

Highlights related to West Virginia’s recent economic performance are as follows:

  • By the end of the third quarter of 2023, the state completed its employment recovery after losing over 80,000 jobs in early 2020. The state has continued to add jobs, and now has about 7,000, or 0.9 percent, more jobs than its January 2020 level.
  • The state’s unemployment rate surged to nearly 16 percent in the Spring of 2020 but has declined significantly since then. The jobless rate reached an all-time low of roughly 3.5 percent during 2022 and has remained very low. Currently the unemployment rate is in the low four percent range.
  • Only 55 percent of West Virginia’s adult population is either working or looking for work . Though an improvement from recent years, this is the second lowest rate of labor force participation among all 50 states and represents a key hurdle to economic prosperity.
  • Per capita personal income (PCPI) in West Virginia ranks 49 th highest among the 50 states, surpassing only Mississippi. PCPI in West Virginia stands at 77 percent of the national average. Movement in PCPI has largely been on par with the nation since around 2016, implying that the state has neither gained nor lost ground compared to the nation.
  • West Virginia’s real GDP growth lagged the nation every year from 2012 through 2022. However, GDP growth in the state nearly doubled growth at the national level in 2023, and the forecast calls for growth for 2024 to be roughly on par with the nation.
  • The energy sector remains an important driver of economic growth in the Mountain State . The value of output in the state’s energy sector has grown by a cumulative 43 percent since 2017, far surpassing growth in all other parts of the state’s economy.
  • Output growth in four of the healthiest sectors in West Virginia – energy, healthcare, information, and professional services – comes in at a cumulative 24 percent since 2017. Conversely, growth in the rest of West Virginia’s economy is negative one percent since 2017. Overall, this implies that West Virginia desperately needs a healthier level of industrial diversification, or health in a wider swath of industrial sectors.

Highlights related to West Virginia’s economic outlook are as follows:

  • Employment in West Virginia is expected to remain essentially flat through 2029. This lags the nation, which is expected to add jobs at an average annual rate of 0.5 percent over the forecast period. Major drivers of this slow growth are the lingering effects of high interest rates, fundamental demographic challenges, and severe weakness in many of the state’s counties.
  • Several recent economic development announcements that are not incorporated into this forecast do offer hope for added strength in a few regions of the state . Strongest examples of recent positive developments are the addition of an estimated 800 jobs associated with Nucor in Mason County, and the addition of 750 jobs associated with FORM Energy in the state’s Northern Panhandle.
  • The state’s unemployment rate is expected to increase slightly over the next couple of years, reaching five percent or so by 2026 or 2027 . This increase will largely be driven by entry into the labor force.
  • Real per capita personal income is expected to grow 2.0 percent annually through 2029. Transfer payments are expected to register faster growth over the next five years, compared to wage and salary income. However, the degree to which the state is increasing its reliance on transfer payments is slowing significantly compared to recent years.

The Mountain State’s underlying demographics remain a major limiting factor to growth moving forward . Consider the following:

  • West Virginia’s population has declined by approximately 80,000 residents – or nearly 5 percent - since 2012. Population losses are expected to be smaller in magnitude going forward.
  • West Virginia’s age distribution ensures that the natural population decline will continue in the coming years. Positive shocks to the economy are essential to encourage in-migration and reduce the severity of natural population decline .
  • Economic development strategies should focus on ways to improve health outcomes, lower drug abuse, and advance educational and vocational training outcomes in the state to make West Virginia’s workforce more attractive to potential businesses.

Economic performance is expected to remain extremely variable across West Virginia’s counties . Consider the following:

  • The state’s top 15 employment growth counties added 18,841 jobs between mid-2014 and mid-2024, while the remaining 40 counties lost 26,380 jobs collectively. Important successes in certain areas of the state are often obscured in aggregate data by losses or stagnation across a large swath of the state.
  • Twenty-five counties are expected to add jobs in the coming five years , which represents a noticeable improvement in terms of the number of growth counties. Expectations for the other counties range from stagnation to significant employment losses. The highest rates of job growth tend to be in the northern counties.
  • While the state overall is expected to lose population in coming years, a handful of counties are expected to add residents during the outlook period. Population gains will occur in North-Central West Virginia, the Potomac Highlands, and the Eastern Panhandle.
  • Policymakers should be keenly aware of significant economic differences across West Virginia counties and ensure that economic development strategies consider each region’s specific strengths and weaknesses.