Economists hopeful state can bounce back as cities grapple with budget shortfalls
BRIDGEPORT, W.Va (WDTV) - It’s going to take some time for the state and the nation’s economies to rebound from the coronavirus pandemic, but economists are optimistic.
The WVU John Chambers College of Business and Economics hosted a webinar Thursday to outline the state's economic position.
John Deskins, director of WVU’s Bureau of Business & Economic Research, referred to it as a recession by design.
"Some of the figures I'm going to show you are pretty striking," he said at the beginning of his presentation during the webinar.
13% of the state's jobs were lost between February and April, putting the state back to the job numbers last seen in the early 1990s.
But the state has already started to rebound. Between mid-April and mid-May t's gained back 13,000 of the 94,000 jobs lost between mid-February and mid-April.
And West Virginia isn't in as bad shape of some of its neighbors. Virginia is the only one of West Virginia's neighbors with less significant job loss during that time at 11%. The national average was 14%.
"I never in my life thought I would say this, but 13% job loss was not as bad as it could have been," Deskins said.
The leisure and hospitality industry was hit the hardest, losing nearly 40% of its jobs.
The state's healthcare industry lost the third-highest percentage of jobs, even though some parts of the field did well during the pandemic.
West Virginia's 15.9 percent unemployment rate was the highest since February 1983. Before the pandemic, it was at 4.9 percent.
"We've never seen anything like this before," Deskins said. "This isn't a recession that has been caused by economic problems. If you look back at previous recessions, they're caused by problems in the economy that develop. But this is a recession that had nothing to do with underlying economic problems."
Meanwhile, cities across West Virginia continue to struggle with budget shortfalls, including in the state's capital city.
Charleston Mayor Amy Goodwin said the city is hoping money from the federal CARES Act will help soften the economic blow. It requested over $11 million in CARES funding from the state. She says she's told they'll receive $3.6 million of that, but so far, the city hasn't received any money.
"We anticipate continuing to work with them," Goodwin said. "But the guidelines within the CARES funding are so restrictive."
Goodwin said much of the city's request CARES Act money would cover refuse, police and fire salaries.
West Virginia received $1.25 billion in CARES Act funding to distribute. As of Wednesday, Governor Jim Justice said the state had distributed $11 million of CARES Act funding across the state.
"Every city, I don't care if you have a city of 500, 50,000 or 250,000, it's all relative to the size of your city, but I can promise you every single week, I'm on the phone with mayors across the state of West Virginia," Goodwin said. "Our problems are exactly the same."
She said local governments across the state are trying to make due with already thin budgets while keeping essential government services available to residents.
"This is what I know about mayors. They're on the front lines, they're nimble, they're trying to do the best with already very tight resources," Goodwin said. "This is definitely going to be a marathon and not a sprint with the infection rates and economic recovery."As for that recovery, Deskins said he's optimistic.
He said the state's economic bounceback could look like a "V shape," but a number of factors will come into play, including more outbreaks of the coronavirus and consumer confidence.
"I personally remain optimistic that we're going to have a relatively rapid recovery," Deskins said, pointing to indicators that the economy is already starting to recover. "But the longer the recession goes, the more underlying damage it will create. The more underlying damage that is created, the longer it will take for the recovery to happen."
A combination of the rapid rate in which the economy declined and the unknowns that surround how the virus will affect life in the coming months makes it challenging for economists to predict what lies ahead, but what they do know is the period we're experiencing is historic in every sense of the word.
"The speed of the decline here is completely unprecedented," Deskins said. "This is not the worst economy we've ever had, not by any means. But the fact that the economy got so bad so fast within one month's time, never have we ever experienced anything even close to that in economic history."
Copyright 2020 WDTV. All rights reserved.