Northrim

There are positive signs that the recession is coming to an end, with a slight growth in jobs during January and February 2019, but the recovery is fragile and will be sensitive to changes in oil prices and budget cuts, Mouhcine Guettabi, associate professor of Economics and ISER faculty told attendees at a series of Alaska Economic Summits sponsored by Northrim Bank in April.

Overall, employment increased by 400 jobs between February 2018 and February 2019. This is in comparison to losses of more than 12,500 jobs since 2016.

Dr. Ralph Townsend, ISER director, will discuss how changes in Alaska’s demographics will impact workforce and health care costs at the annual Northrim Bank Lecture series at Mat-Su College Tuesday, February 12 at 7p.m.  

Using the latest research and data on Alaska demographics, health care costs, and employment, Townsend will provide insights into challenges facing Alaska in the next decades. 

A new paper by ISER researchers Mouhcine Guettabi, Trang Tran, and Linda Leask aims to give some context to to the ongoing debate about how much Alaska's state government should be spending, as it faces big budget deficits. The paper look at state spending in several ways.

As of 2015 (the most recent year for which cross-state data are available), per-person spending by Alaska's state and local governments was twice the national average. But much of that gap is due to Alaska's unique spending programs (PFDs being the largest but not the only one), higher living costs, and federal grants that are twice the U.S. average per person.

Adjusting for Alaska's unique spending and higher living costs, spending per person in Wyoming (another oil-producing state with a small population) was higher than Alaska's in 2015. Spending in North Dakota (another oil-producer with a small population) was within 15% of Alaska's.

Over the 20-year period from 1992 to 2015, real (adjusted for inflation) spending per person in Alaska grew much slower than the national rate—50% compared with 73%. Alaska's spending did grow faster than the national rate in the last years of that period, when oil prices were high.

Download the paper, How Does Spending in Alaska Compare? A grant from Northrim Bank helped fund this research. If you have questions, get in touch with Mouhcine Guettabi, assistant professor of economics at ISER, at mguettabi@alaska.edu or 907-786-5496.

In 2017, job losses in Alaska's ongoing recession spread from the sectors first affected—primarily oil and gas and state government—to the sectors that depend on household spending, including retail trade, accommodation and food services, and leisure and hospitality. Alaska will continue losing jobs in 2018, but at a slower pace— likely in the range of 0.7%. That slower pace isn't a sign of recovery, but rather an indication that the initial shock of low oil prices has made its way through the economy.

These are among the findings of a new overview of Alaska's economic and fiscal conditions, by Mouhcine Guettabi, assistant professor of economics at ISER. He also estimates that the the fiscal uncertainty caused by the state's current lack of a plan for dealing with its huge budget deficit may be reducing capital investment in Alaska by something on the order of $200 million to $600 million a year. The overview also considers the effects of different rates of withdrawal from the Permanent Fund earnings reserve, should the legislature decide to use some of those earnings to pay for government operations.

Download the report, What Do We Know to Date about the Alaska Recession and the Fiscal Crunch? By Mouhcine Guettabi, with support from Northrim Bank. If you have questions, get in touch with the author at mguettabi@alaska.edu or 907-786-5496.

Construction spending in Alaska will be an estimated $8.5 billion in 2015, down about 3% from spending in 2014. That's according to the 2015 construction spending forecast, by Scott Goldsmith and Pamela Cravez of ISER. That forecast is done annually for the Construction Industry Progress Fund and the Associated General Contractors of Alaska, with funding from Northrim Bank. The authors find:

• Overall construction spending will remain strong in 2015, despite the recent steep drop in oil prices. That's partly because there is still a backlog of projects funded under large state capital budgets in earlier years.

• Forecasting how much oil companies will spend for capital projects in Alaska is especially difficult this year. The companies had earlier announced plans to increase spending 18%. But the low oil price will likely force some cutbacks, so spending is forecast to stay about the same as last year.

• Private spending for commercial and residential construction is likely to be down in 2015, in the face of slowing job and population growth and uncertainty about oil prices.

Download Alaska's 2015 Construction Spending Forecast (pdf, 1.8MB), by Scott Goldsmith and Pamela Cravez. If you have questions, get in touch with Scott Goldsmith at osgoldsmith@uaa.alaska.edu.

A presentation given by Mouhcine Guettabi and John MacKinnon in Anchorage on January 29, 2015 and Fairbanks on January 30, 2015 is also available for download (PDF, 1.8MB).

ISER publications are solely the work of individual authors and should be attributed to them, not to ISER, the University of Alaska Anchorage, or the research sponsors.

In early April, Northrim Bank made a grant of $100,000 to ISER for its ongoing research initiative, Investing for Alaska's Future. Northrim has now granted ISER a total of $1 million for this research, which is examining the importance of investment for building a strong Alaska economy. Scott Goldsmith, professor emeritus of economics at ISER, directs the initiative. See more about this announcement at the UAA Archive. 

On April 4, Northrim Bank made a gift of $125,000 to ISER for continued funding of the special research initiative, Investing for Alaska’s Future. That brings to more than $500,000 the total Northrim has provided ISER since 2004 for that research, which is directed by Scott Goldsmith, professor of economics. The work is intended to help Alaskans better understand the relationship between government policies and economic development, inform investment decisions, and monitor state economic and fiscal conditions.