The state economy has lost jobs for two straight years, according to a new report from the West Virginia University Bureau of Business and Economic Research. Since March 2001, the state has lost nearly 7,000 jobs and the state unemployment rate has spiked from 4.8 percent in 2001 to the 6 percent range currently.

But the states job situation isnt that bad compared to the nation, the report concludes.

West Virginias job losses have been roughly half as bad as the nations since the last national recession began in March 2001,said George Hammond, acting director of the bureau and author of the Mid-Year Review 2003.In fact, national employment has dropped by 1.9 percent since March 2001, while state jobs have only declined by 0.9 percent.

While the national recession is thought to have ended in November 2001, job losses have continued for both the state and the nation, Hammond said. Most state job losses during 2002 came in coal mining and manufacturing, with glass products, primary and fabricated metals and chemical products generating the largest job losses. These sectors have been punished by weak demand growth, intense competition from both domestic and international rivals, and a strong dollar.

The state has outperformed the national economy in terms of inflation-adjusted income growth, by generating increases in the 2 percent range during 2001 and 2002, compared to essentially zero growth nationally, he added. This means that the state has made progress in closing the income gap with the nation since 2000. The gap was 26.7 percent in 2000, but now stands at 23.4 percent. This marks the first decline in the income gap since the mid-1990s.

While national growth remains sub-par, many economists expect faster growth to finally take hold during the second half of 2003. This outlook hinges on sustained consumer spending (buoyed by low-interest rates and tax cuts), rebounding business investment, steady residential construction activity, and a falling dollar.

The major risks to the outlook revolve around the very real possibility that consumers will save their tax cuts instead of spending them and that businesses may hold off on investment spending longer than expected, Hammond cautioned. The bottom line in this pessimistic scenario is sustained, slow real gross domestic product growth in the 2 percent per year range, which in turn generates minimal job gains.

Rebounding national growth would gradually pull the state growth up as well,he said,”but job growth is likely to be muted during the rest of the year.

Further, the possibility of surging natural gas prices means more cost pressure on the chemical and primary metals sectors, which are already suffering under intense international and domestic competition, Hammond added.

A falling U.S. dollar should help, but weak European and Japanese growth will reduce the impact,he said. The report is available free of charge online athttp://www.bber.wvu.edu.