Alaska s Economy: Then and Now

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Berenice Chambers
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1 Alaska s Economy: Then and Now, PhD Institute of Social and Economic Research University of Alaska Anchorage 10/11/2017

2 Outline General Overview 1 General Overview Alaska s Economy and Demographics:Then and Now 2 3 Where do we go from here?

3 Alaska s Economy and Demographics:Then and Now Outline 1 General Overview Alaska s Economy and Demographics:Then and Now 2 3 Where do we go from here?

4 Alaska s Economy and Demographics:Then and Now Alaska as a state used to be known for rising employment and population, characterized by periods of boom and bust such as the construction of the trans-alaska oil pipeline in the mid-1970s, the recession following completion of the pipeline in the late 1970s, the government spending and construction driven boom of the early 1980s, and the oil price crash driven deep recession of the late 1980s. While true once, that picture is no longer true.

5 Alaska s Economy and Demographics:Then and Now Big Savings account Alaska has built a very big savings account. In 1976, Alaskans voted to put part of the state s oil revenues into a special account the legislature couldn t spend. With that decision, Alaskans used temporary oil revenues to create a permanent asset. As of October 5th, 2017 the Permanent Fund had a balance of close to 62 billions.

6 Alaska s Economy and Demographics:Then and Now Snapshot of how much Alaska has changed /2017 Wage employment 130, ,183 Savings account 0 $62 billion Population 304, ,000

7 Alaska s Economy and Demographics:Then and Now Slow and steady For the past quarter-century, Alaska s economy has been characterized by relatively slow and steady growth in population and employment driven by growth across many sectors such as the federal government, mining, tourism, air cargo, healthcare, and retail trade, and with significant regional variation.

8 Alaska s Economy and Demographics:Then and Now What about now? Alaska s situation in numbers Alaska s Fiscal and Economic Situtation by the numbers Budget and economy Unrestricted GF revenues Wage and Salary Employment 335, , , , ,498

9 Alaska s Economy and Demographics:Then and Now Dimensions of change Alaska has considerably changed along almost all dimensions. Quality of life has improved significantly. Alaskans are richer, more likely to own a home, and less likely to be male than 50 years ago.

10 Alaska s Economy and Demographics:Then and Now Dimensions of change Alaska has considerably changed along almost all dimensions. Quality of life has improved significantly. Alaskans are richer, more likely to own a home, and less likely to be male than 50 years ago.

11 Alaska s Economy and Demographics:Then and Now Dimensions of change Alaska has considerably changed along almost all dimensions. Quality of life has improved significantly. Alaskans are richer, more likely to own a home, and less likely to be male than 50 years ago.

12 Outline General Overview 1 General Overview Alaska s Economy and Demographics:Then and Now 2 3 Where do we go from here?

13 Does Alaska still have considerably more men? Alaska population by gender: , , , , , , , ,000 0 The share of the male population decreased from 0.72 in 1900 to 0.51 in In fact, the male to female ratio has been less than 1.2 since 1970 and is currently at Female Male

14 What about the age distribution? 70.00% 60.00% 50.00% Age distrbitution by decade % 30.00% 20.00% 24.58% 22.54% 24.28% 20.26% Less than 5 5 to to 65 Over % 0.00% 2.55% 3.62% 5.23% 7.00%

15 Alaska evolution: homeownership 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Homeownership rates for Alaska and the United States Homeownership rates increased from 50 to 58% between 1970 and 1980 census. Another significant jump occurred between 1990 and AK US

16 Alaska evolution: crowding 35.00% 30.00% Slighly different measures of economic stability Crowding: % 25.00% 20.00% 15.00% 10.00% 19.40% 19.60% 10.10% 8.60% 8.60% US Alaska 5.00% 0.00%

17 Alaska evolution: neighborhood stability Turnover and neigborhood stability % 25.00% 25.80% 23.30% 21.50% 20.00% 15.00% 10.00% 13.20% 11.90% AK US 5.00% 0.00%

18 1/1/1984 1/1/1985 1/1/1986 1/1/1987 1/1/1988 1/1/1989 1/1/1990 1/1/1991 1/1/1992 1/1/1993 1/1/1994 1/1/1995 1/1/1996 1/1/1997 1/1/1998 1/1/1999 1/1/2000 1/1/2001 1/1/2002 1/1/2003 1/1/2004 1/1/2005 1/1/2006 1/1/2007 1/1/2008 1/1/2009 1/1/2010 1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016 1/1/2017 General Overview Nonperforming loans: Now and Then Percent of nonperforming loans ( past due 90+ days) relative to total loans % Periods of loan distress: -During the 1980's recession, the percent of nonperforming loans peaked at 17.29%. - During the great recession, they peaked at 4.77%. - So far in this current recession, the percent of nonperforming loans has peaked at 1.09% in % 1.09%

19 Outline General Overview 1 General Overview Alaska s Economy and Demographics:Then and Now 2 3 Where do we go from here?

20 Major events General Overview 0 100, , , ,000 Wage and Salary Employment in Alaska Significant Economic Events Between 1959 and 2015 Oil begins flowing through the pipeline Pipeline construction begins Alaska recession begins, following crash in oil prices First PFD distributed First year of negative growth in two decades Continuous period of employment growth from 1989 to 2008 averaging 1.8% per year Period of very slow growth before recession

21 What about wages? Real average wage and salaries 1969 to ,979 74,700 The average wage growth between 2000 and 2015 was 0.73% 0 20,000 40,000 60,000 80,000 Average wages and salaries

22 What do we know about the current economic situation? We are in the middle of the second year of the recession. The contraction has spread from Oil and Gas, Construction, and to the rest of the economy in this last year. Most boroughs and census areas are feeling the squeeze.

23 What do we know about the current economic situation? We are in the middle of the second year of the recession. The contraction has spread from Oil and Gas, Construction, and to the rest of the economy in this last year. Most boroughs and census areas are feeling the squeeze.

24 What do we know about the current economic situation? We are in the middle of the second year of the recession. The contraction has spread from Oil and Gas, Construction, and to the rest of the economy in this last year. Most boroughs and census areas are feeling the squeeze.

25 Basic picture: Economic contraction Employment growth rate using QCEW Employment growth rate at the borough level at the state level -1.81% Alaska -2% -1% 0% 1% 2% 2002 We lost 6,221 jobs between 2015 and % 2016 Aleutians East Aleutians West Anchorage Bethel Bristol Bay Denali Dillingham Fairbanks Haines Hoonah-Angoon Juneau Kenai Ketchikan Kodiak Kusilvak Lake and Pen Matsu Nome North Slope Northwest Arctic Petersburg POW Sitka Skagway Southeast Fairbanks Valdez Wrangel Yakutat Yukon -10% -5% 0% 5% 10% 20% Growth rate

26 Inside the numbers

27 Outline General Overview 1 General Overview Alaska s Economy and Demographics:Then and Now 2 3 Where do we go from here?

28 How are the hardest hit sectors doing relative to 2014?

29 Outline General Overview 1 General Overview Alaska s Economy and Demographics:Then and Now 2 3 Where do we go from here?

30 How is doing relative to 2014?

31 Outline General Overview 1 General Overview Alaska s Economy and Demographics:Then and Now 2 3 Where do we go from here?

32 How are spending dependent sectors doing relative to 2014?

33 Where do we go from here? Outline 1 General Overview Alaska s Economy and Demographics:Then and Now 2 3 Where do we go from here?

34 Where do we go from here? Preliminary projections Wage and Salary employment growth projections growthrate -2% -1% 0% 1% 2% These projections do not include major cuts or added taxes -1.81% -2.3% -0.7% year Actual Growth Rate Forecast

35 Where do we go from here? Major decisions ahead Alaska is slowly becoming a state dependent on a financial asset. Need for new revenues is inevitable. While the economy has weakened, the fundamentals are still sound. Delaying a decision means more uncertainty. The good news is that the state has options that are sustainable.

36 Where do we go from here? Major decisions ahead Alaska is slowly becoming a state dependent on a financial asset. Need for new revenues is inevitable. While the economy has weakened, the fundamentals are still sound. Delaying a decision means more uncertainty. The good news is that the state has options that are sustainable.

37 Where do we go from here? Major decisions ahead Alaska is slowly becoming a state dependent on a financial asset. Need for new revenues is inevitable. While the economy has weakened, the fundamentals are still sound. Delaying a decision means more uncertainty. The good news is that the state has options that are sustainable.

38 Where do we go from here? Major decisions ahead Alaska is slowly becoming a state dependent on a financial asset. Need for new revenues is inevitable. While the economy has weakened, the fundamentals are still sound. Delaying a decision means more uncertainty. The good news is that the state has options that are sustainable.

39 Where do we go from here? Major decisions ahead Alaska is slowly becoming a state dependent on a financial asset. Need for new revenues is inevitable. While the economy has weakened, the fundamentals are still sound. Delaying a decision means more uncertainty. The good news is that the state has options that are sustainable.

40 Where do we go from here? Thank you Thank You Phone Number : mguettabi@alaska.edu

Analyzing indicators for small northern places

ReSDA Workshop No 1 Resources and Sustainable Development in the Arctic Yellowknife NWT, September 18 19 2011 Analyzing indicators for small northern places Larry Hamilton Department of Sociology University