The state economy is on the edge of recession, according to the latest forecast from the West Virginia University College of Business and Economics .

Slowing growth in the state reflects the impact of the national housing correction, as well as the national economic slowdown, states the forecast, released today (Nov. 18) at the 15th annual West Virginia Economic Outlook Conference in Charleston.

West Virginia continued to grow during the past year, but just barely,said George W. Hammond , associate director of the Bureau of Business and Economic Research .With the national economy in recession, West Virginia is forecast to lose jobs during the next year.

The state is forecast to lose 4,800 jobs from 2008-09, and the state unemployment rate is expected to climb from 4.9 percent in 2008 to 6 percent in 2009.

Overall, the state downturn is likely to be less severe than nationally, and state growth is expected to turn positive again in 2010,Hammond said.However, the current downturn may be more severe than similar episodes earlier this decade and in the early 1990s.

West Virginias job growth has been modest during the past four quarters, in large part because of a slowdown in the goods-producing sectors, Hammond said.

This reflects job losses in construction and manufacturing from the third quarter of 2007 to the same quarter of 2008. Mining jobs continued to expand, although at a slower rate than during the third quarter of 2006 to the same quarter of 2007. Retail trade, finance and information also posted job losses last year, while health care, leisure and hospitality, government, and professional and business services posted job gains.

Job losses in construction and finance reflect the impact of the national housing correction on the state, and job losses in these sectors are forecast to continue next year.

The impact of the housing correction has been most severe in the Eastern Panhandle counties,Hammond said.

In 2008, the value of residential construction starts in the Eastern Panhandle (Berkeley, Jefferson and Morgan counties) has dropped by 45 percent from the same period in 2006. In addition, the metropolitan statistical areas, including the Eastern Panhandle counties, have seen significant declines in single-family house prices during the past year. While residential construction activity is slowing for the rest of the state as well, single-family house prices continue to rise.

State job losses next year are expected to be most severe in construction; manufacturing; trade, transportation and utilities; and professional and business services.

The forecast calls for the state to rebound in 2010 and post steady growth through 2013. By 2013, the state is expected to be hitting new highs in terms of the number of jobs and inflation-adjusted per capita personal income.

The state is forecast to add residents on average during the next five years, although at a slow rate of 2,900 per year. The 65-and-older age group posts fast growth during the next five years, as the baby-boom generation ages. Real per-capita income growth averages 1.6 percent per year through 2013, equal to the expected national rate.

While the state is on the verge of recession, the nation is already there, said David Wyss, who is responsible for Standard&Poors economic forecasts and publications and co-authors the monthly Forecast Summary and the weekly Financial Notes.

Consumers appear to have thrown in the towel,Wyss said.After a decade of living dangerously, they have become scared of the excessive debt and lack of saving. As usual, consumers have begun saving for a rainy day only after it started to rain. With the baby-boom generation marching toward the cliff of retirement, they are belatedly thinking of packing a parachute.

He also said a return of confidence could be as early as next year.

Banks are as scared as consumers,Wyss said.Although smaller banks are still solvent and open for business, they are being more careful in assessing risk and limiting loans to all but their best customers. The result is a recession. We expect confidence to recover, but it will take a while, probably until mid-2009.

The new presidents challenge will be to restore confidence to the financial market and to the economy while also putting in the touch of reality as government spending explodes with the baby-boomer retirements,he added.

Full details are available in a 50-page publication available from the WVU Bureau of Business and Economic Research for $30 per copy. Contact Jamie Kiszka at 304-293-7831 or via e-mail at ” Jamie.Kiszka@mail.wvu.edu rel=nofollow> Jamie.Kiszka@mail.wvu.edu for more information.