Saturday, March 28, 2015

A GLIMMER OF LIGHT IN THE FOG OF ECONOMIC HAPPY TALK

After years of accumulating quantitative evidence, this story by David Gutman in Thursday's Charleston Gazette suggests that West Virginia news outlets are beginning to recognize the state's horrific economic performance during the past decade and the nearly complete failure of the natural gas boom and state economic policies to increase prosperity.

The trigger for this realization is the US Census Bureau's most recent data release, which shows that West Virginia is losing population faster than any other state and, significantly, the decline is happening even in the northern panhandle and in north-central parts of the state where the natural gas boom is concentrated. Gutman's article quotes Ted Boettner of the West Virginia Center on Budget and Policy and West Virginia University economist, Christaldi, who point out that natural gas drilling is a capital-intensive, but not employment-intensive, industry and that many of the workers appear to be residents of other states. They might as well have added that expected indirect and induced economic impacts of the natural gas boom have been vastly watered down by unexpectedly low natural gas prices, which reduce royalties and, therefore, dollars being injected into West Virginia's economy and by the state's chronic problem of out-of-state ownership of resources which causes a significant share of royalties and capital gains to flow elsewhere.

In short, the decision by West Virginia policymakers to adopt an economic strategy that imagines the coal and natural gas industries along with corporate tax cuts to be the engines of economic growth was wildly misguided. So, as the rest of the country has seen a nearly 6% growth in the number of jobs over the last three years, West Virginia has experienced a decline in the absolute number of jobs in the state and an even greater decline in the number of those jobs that are held by West Virginians -- a figure that is now at its lowest point since 1995.

It was in January 2011 that newly appointed West Virginia Governor Earl Ray Tomblin in his first State of The State speech took stock of West Virginia's balanced state budget, improvements in the state's business climate (read "corporate tax cuts"), and building momentum in the natural gas industry and proclaimed the state poised for "unprecedented growth in jobs and prosperity". Four years later the state budget is chronically deficit-ridden and the tax breaks and fracking boom have failed to produce increases in jobs or prosperity, yet as recently as this week Secretary of Commerce Keith Burdette continued to argue that West Virginia's energy industries combined with improvements in the state's business climate can raise us out of our economic torpor if . . . if . . . the state can educate and train a qualified workforce.

Too bad for Mr. Burdette and worse for the state that West Virginia's budget deficits, which were brought about by the aforementioned tax policies, are causing the state to cut investment in education and training just when he says we need more of both as we assuredly do. However, to lay the blame for West Virginia's economic failings entirely at the feet of an underqualified workforce ignores the obvious failings of the policies that got us to this point and, frankly, the need to reverse them. That's why articles such as Gutman's are vital and with any luck will soon begin to appear regularly in newspapers throughout the state.

Tuesday, March 17, 2015

NUMBER OF WEST VIRGINIANS WITH JOBS HITS ANOTHER LOW

Workforce West Virginia's monthly update shows that another 2,800 West Virginians lost their jobs last month bringing total job losses in the past year to 14,400 and 19,500 since January of 2014. It is the 13th consecutive month of declines in the number of working West Virginians, which at 726,100 now stands at its lowest point since December of 1995. Meanwhile, the state's unemployment rate rose from 5.9% to 6.1%.

Almost 52,000 jobs have been lost since the state hit its peak employment figure of 778,000 in April of 2008.

(Click on the image to enlarge or go to the Workforce West Virginia web site.)

Monday, March 16, 2015

HOOPIES VS. MASTERS OF THE UNIVERSE

In 2014, 167,880 Wall Street security industry employees received $28.5 Billion in bonuses. Between Q3 2013 and Q2 1014, the last year for which data is complete, all 1,852,000 West Virginians had total wages of $28.4 Billion.

(In Millions of Dollars)

(NOTE: Thanks to Antipode for pointing out in a comment that can be seen below that in the original published version of this post I mistakenly wrote that the $28.4 Billion figure for West Virginians is for "income" in 2013. The figure is for "total wages" and covers the last four completed quarters for which data is available -- Q3 2013 through Q2 2014. The original data for West Virginia can be found at http://www.workforcewv.org/lmi/Employment_N_Wages/EnW.html. Sorry for the mistake.)

Sunday, March 15, 2015

IT'S NOW RENEWABLES VS. NATURAL GAS. COAL IS DEAD.

An interesting piece from Slate Moneybox on the iminent demise of coal. And it's not coincidental that the symbolism is starting to catch up with the economics.

For years proponents of renewable energies have anticipated the achievement of price-parity with coal as a break-out point. But, as that moment approaches its significance is diminished because, although coal remains the nation's largest source of electricity generation, it is in decline, its dominance is being broken by low-price natural gas. That change in the competitive landscape will probably slow the uptake of renewables and create a new "tipping point", the old one having evaporated.

Meanwhile, coal, now a terminal patient, will become less and less a part of the conversation.

Friday, March 13, 2015

A SUCKER BORN EVERY MINUTE . . . AND THEY'RE ALL IN WEST VIRGINIA'S LEGISLATURE

(Congressman Paul Ryan, R-WI, warns of an imminent outbreak of inflation. May 2011)

Perhaps the best measure of the nitwitedness of West Virginia legislators is that, at a time when the evils supposedly caused by the federal debt and deficits are utterly absent -- economic stagnation, skyrocketing inflation, soaring interest rates, and, horror of horrors, "debasement of the currency" (I won't even discuss national bankruptcy, which is literally impossible) -- the legislature is passing a resolution to convene a constitutional convention for the purpose of requiring a balanced federal budget. In other words, an imagined cure for a nonexistent disease.

The legislature is driven by characters such as the economist Arthur Laffer, Wisconsin Congressman Paul Ryan, and the truly bizarre Michael Farris who continue to peddle their apocalyptic predictions despite the fact that reality has long since proven that they and their understanding of how economies work are just plain wrong. Has anyone in the legislature noticed that after years of dire warnings and the ongoing pursuit of purportedly destructive policies -- low interest rates, quantitative easing, and deficit spending -- that America's economy is growing faster than any other western industrialized country's, that inflation is so low we're bordering on deflation, that intrest rates remain at record lows, that the deficit is coming down,and that the dollar has reached an all-time high against the Euro?

That last item -- the exchange rate between the dollar and Euro -- is especially telling since it was the European policy of economic austerity that the sirens of doom have long prescribed and continue to prescribe for the United States. Yet, seven years after the economic crash, it's the virtuous Europeans whose currency is tumbling and whose economy remains mired in stagnation. But, reality and facts apparently have no weight with those enlightened by ideology.

So, Ryan, Laffer, Farris and others continue to flog their policy of economic austerity like hucksters selling waterfront property in a desert. And inevitably . . . sadly . . . there are those naive enough to buy it, West Virginia's legislature now occupying the top of the list.


Wednesday, March 11, 2015

ELECTRICITY-GENERATING CAPACITY GROWING DESPITE COAL'S DECLINE

It will come as little comfort to fearmongers who predict that coal's decline will give rise to all sorts of catastrophes ranging from power shortages to skyrocketing utility rates, but it's great news for the rest of us that the Energy Information Administration projects that electricity-generating capacity from natural gas and renewables is growing even faster than coal-generated capacity is declining. That suggests the nation will have a more than adequate supply of electricity going forward even as utilities are weaned off of coal.

This year the nation's electricity-generating capacity from natural gas and renewables will grow by almost 18 gigawatts while less than 13 gigawatts will be lost due to the closure of coal-fired plants. When all of the additions and subtractions of all sources are taken into account the nation will gain about 4 gigawatts of capacity this year.

Wednesday, March 4, 2015

WV's ROAD TO THE FEWEST JOBS IN TWO DECADES

Today the West Virginia Department of Commerce released the latest employment figures for the state. And, for the first time since January 1996 the number of working West Virginians dropped below 730,000. The following chart illustrates the plunge in the number of West Virginians with jobs while also noting the accompanying policy blunders as well as the frequent and inexplicable proclamations of prosperity made by the state's political leaders.

Click on the image to enlarge.

It's hard to imagine a more vivid and compelling condemnation of West Virginia's economic policies of the past eight years, which have largely consisted of slashing business taxes in order to become more "business-friendly" while staking the state's economic future to the fortunes of the coal and natural gas industries.

Will our leaders notice? Will our leaders act . . . or, more specifcally, will they act differently?

 
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