The state is in the midst of its longest recession. A new analysis by Mouhcine Guettabi, an associate professor of economics at ISER, analyzes how the recent decline in oil prices has affected the overall Alaska economy and its individual sectors, compares the Alaska recession to that of other energy-dependent states, and estimates the long run relationship between oil prices and employment growth. The report finds:
- Alaska has experienced 34 straight months of negative growth. Overall, Alaska’s employment as of June 2018 was 96.6% of what it was in June 2014.
- All the indicator variables we evaluate point to Alaska being in the tail end of the recession but the recovery of the jobs lost will be elusive as the oil sector, construction sector, and the business and professional services sector are all much smaller than they were four years ago. The historical growth catalysts- oil and government spending- are not yet in a position to generate considerable job growth.
- Only six of the 13 energy-dependent states experienced a recession.
- Of those six states, only North Dakota and Alaska continue to be in a recession. Oklahoma, Louisiana, and Wyoming have all lost jobs but have had robust recoveries. Louisiana has already had 10 straight months of positive growth, Wyoming 12 months, and Oklahoma 15 months.
- Using monthly data from 1991 to 2018, our econometric analysis shows that on average, a 10% change in oil prices results in a 1.7% change in employment in the long run across the five most important oil states. Using Alaska numbers, it translates to about 4,515 jobs.
- Our state-by-state analysis shows that both Wyoming and North Dakota have asymmetric responses to positive and negative oil shocks, while Alaska, Louisiana, and Oklahoma have symmetric responses. The length of time these shocks are felt in the respective states, however, varies.
Download the report, How do oil prices influence Alaska and other energy-dependent states?
If you have questions, get in touch with Mouhcine Guettabi at mguettabi@alaska.edu or 907-786-5496.
