The Times West Virginian

Business

June 1, 2014

Mountain State Business Index offers information on West Virginia’s overall economy

FAIRMONT — Thanks to the new Mountain State Business Index, people can stay up to date on West Virginia’s overall economy with simple, easy-to-follow statistics.

Last week, the West Virginia University College of Business and Economics’ Bureau of Business and Economic Research (BBER) held a press conference in Morgantown to kick off this new monthly index and make the first press release available.

“I am frequently asked how is West Virginia’s economy doing or where is the state’s economy headed, and those questions are complicated to answer,” said John Deskins, who became the director of the BBER last summer.

He said the economic data that is out there is hard to process and interpret, especially when particular statistics are viewed in isolation. The BBER’s index consolidates all of the information that can be found in the news into one simple metric about the direction that the state’s economy is moving.

The nation as a whole and some other states have similar indexes. Now, if someone wants to learn about the economy of West Virginia and where it is likely to go in the coming months, the Mountain State Business Index can be their starting point. Then they can follow up by examining other resources, Deskins said.

“I think this is the first place that you should go when you’re trying to understand West Virginia’s economy,” he said.

The last week of each month, WVU will publish a press release on its website, wvutoday.wvu.edu, that will present the latest economic numbers along with the interpretation of the BBER.

“We examine a bunch of different statistics, dozens of different variables,” Deskins said.

The BBER used statistical analysis to determine which variables are the best for explaining the status of the economy, he said.

The following seven variables are most appropriate for pointing to where the state economy is headed and are combined into the index: building permits, unemployment insurance claims, the value of the U.S. dollar, stock prices for publicly traded West Virginia employers, interest rates, coal production and natural gas production.

“Signals of a coming contraction in the state’s economy can be identified if the index declines by at least 2 percent on an annualized basis over a six-month period and a majority of the individual components also decline over that same time period,” the press release stated.

Deskins said that late last year and early this year, West Virginia’s index remained steady, and then in May, the state saw a pretty big jump — 0.5 percent — from April. This represented the biggest monthly increase since the end of 2006.

“Overall, the index has grown by 1.4 percent over the last year,” he said, based on past data.

The BBER expects steady growth through the summer, and the acceleration of economic growth could possibly continue through the fall, Deskins said.

“The index is looking good,” he said. “We hope this trend continues.”

The only way to know for sure is to keep following the index. According to the index, the probability of a recession is very slim, Deskins added.

He believes the Mountain State Business Index will be widely used and will offer good first statistics to characterize the state’s economy.

Email Jessica Borders at jborders@timeswv.com or follow her on Twitter @JBordersTWV.

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