Alaska s Economy: Then and Now

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

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

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?

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.

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.

Alaska s Economy and Demographics:Then and Now Snapshot of how much Alaska has changed 1970 2016/2017 Wage employment 130,000 361,183 Savings account 0 $62 billion Population 304,000 737,000

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.

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 2013 2014 2015 2016 2017 Unrestricted GF revenues 6.9 5.39 2.25 1.53 1.64 Wage and Salary Employment 335,366 336,640 338,262 332,138 324,498

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.

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.

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.

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

Does Alaska still have considerably more men? Alaska population by gender: 1900-2016 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 The share of the male population decreased from 0.72 in 1900 to 0.51 in 2016. In fact, the male to female ratio has been less than 1.2 since 1970 and is currently at 1.06. 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2011 2012 2013 2014 2015 2016 Female Male

What about the age distribution? 70.00% 60.00% 50.00% Age distrbitution by decade 1980-2010 40.00% 30.00% 20.00% 24.58% 22.54% 24.28% 20.26% Less than 5 5 to 18 19 to 65 Over 65 10.00% 0.00% 2.55% 3.62% 5.23% 7.00% 1980 1990 2000 2010

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 1950-2016 Homeownership rates increased from 50 to 58% between 1970 and 1980 census. Another significant jump occurred between 1990 and 2000 1950 1960 1970 1980 1990 2000 2010 2011 2012 2013 2014 2015 2016 AK US

Alaska evolution: crowding 35.00% 30.00% Slighly different measures of economic stability Crowding: 1940-2000 30.50% 25.00% 20.00% 15.00% 10.00% 19.40% 19.60% 10.10% 8.60% 8.60% US Alaska 5.00% 0.00% 1940 1950 1960 1970 1980 1990 2000

Alaska evolution: neighborhood stability Turnover and neigborhood stability 1960-2000 30.00% 25.00% 25.80% 23.30% 21.50% 20.00% 15.00% 10.00% 13.20% 11.90% AK US 5.00% 0.00% 1960 1970 1980 1990 2000

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 20.00 18.00 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 17.29% 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 2017. 4.77% 1.09%

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

Major events General Overview 0 100,000 200,000 300,000 400,000 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 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

What about wages? Real average wage and salaries 1969 to 2015 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 57,979 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

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.

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.

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.

Basic picture: Economic contraction Employment growth rate using QCEW Employment growth rate at the borough level 2015-2016 at the state level -1.81% 2002-2016 Alaska -2% -1% 0% 1% 2% 2002 We lost 6,221 jobs between 2015 and 2016 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015-1.8% 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

Inside the numbers

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

How are the hardest hit sectors doing relative to 2014?

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

How is doing relative to 2014?

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

How are spending dependent sectors doing relative to 2014?

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?

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% 2000 2005 2010 2015 2016 2017 2018 2019 2020 year Actual Growth Rate Forecast

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.

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.

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.

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.

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.

Where do we go from here? Thank you Thank You Phone Number :907-786-5496 email : mguettabi@alaska.edu