In recession's shadow, W.Va. still shows momentum

AP News
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Posted: Dec 28, 2009 10:52 AM

An array of economic indicators suggests that West Virginia is entering 2010 better positioned than nearly all other states to weather the remnants of the Great Recession.

The nonpartisan Federal Funds Information for States ranks West Virginia behind only North Dakota in its latest Index of State Economic Momentum.

The index looks at growth in personal income, employment and population to measure each state's fiscal vitality.

West Virginia was among just four states to post positive income growth during the June to September analysis period, and led the nation in that category. It also topped the other states for growth in the group's previous index issued in June, when it ranked fourth overall.

The latest index, released last week, contrasts West Virginia's 2.52 percent income growth with a national average loss of 2.57 percent. The three other states with growth _ North Dakota, neighboring Maryland and Iowa _ were all below 1 percent.

"Until recently, states with strong natural resource or agricultural sectors most regularly recorded personal income growth that reflected growing state economies," the index report notes. "This is no longer true, as virtually every state finds itself in recession."

No states reported employment gains during the period, when compared with the same point in 2008. West Virginia's rate fell by 3.6 percent, less than more than half the states. The national average was a 4.2 percent decline.

"To provide some context, in last September's update, 27 states experienced employment growth, further demonstrating the widespread deterioration in state-level economies since that time," the report said.

The Mountain State's population grew slightly, by 0.3 percent, but below the national average of 0.9 percent. Utah led in that category, posting 2.5 percent growth. Just two states, Michigan and Rhode Island, saw negative growth.

The report credits the strength of North Dakota's farming and natural resources sectors for its top overall ranking. Natural resources, particularly coal, have similarly helped West Virginia cope with the economic downturn.

The state's enviable rankings _ it was eighth in March's index _ may also underscore how badly the recession has damaged the economies of most other states. Before this year, it had never cracked the Top 10. During 2008, it had ranked as low as 46th, and was dead last in June 2004.

The latest index, the report said, "represents the completion of a transition from economic prosperity to recession. Prior to this update, a small group of states was holding its own and another was struggling mightily. Now, the first group is pretty much gone altogether and the second group has absorbed virtually every state."

The report cites the housing crisis as a key drag on the nation's 10 most populous states, six of which ranked in the bottom 10. Michigan has shown the worst momentum all year _ but has also been at or near that position since at least early 2004.

"While most states seem to be converging around the national average, the national economy itself is weaker than it has been," the report said. "The national average has been skewed downward by many of the largest states performing particularly poorly."

The group's next index is slated for March, and will reflect indicators for the final three months of this year. West Virginia may have a tough time keeping its high ranking. The Manchin administration had estimated that personal income taxes would yield $587.8 million between the July 1 start of the budget year and the end of November. That general revenue source entered December nearly $41 million below that goal, having missed each of its monthly projections so far.

Manchin officials have already estimated a $100 million general revenue shortfall for the budget year. While noting that revenues could also improve, they informally increased that estimated gap to $120 million earlier this month.

But economic weakness is a major theme of last week's report from Federal Funds Information for States. The latest index "shows that all states are now mired in recession," it said. "The coming months will reveal how low state economies will go, and how long they will stay there."