Alaska’s Economic Landscape AGFOA Fall Conference November, 16th, 2015 Alaska Department of Labor...
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Alaska’s Economic Landscape AGFOA Fall Conference November, 16th, 2015 Alaska Department of Labor and Workforce Development, Research Section, Neal Fried, Economist The rise of coffee shops in AK
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Transcript of Alaska’s Economic Landscape AGFOA Fall Conference November, 16th, 2015 Alaska Department of Labor...
Alaska’s Economic Landscape
AGFOA Fall ConferenceNovember, 16th, 2015
Alaska Department of Labor and Workforce Development, Research Section, Neal Fried, Economist
The rise of coffee shops in AK
1980 1985 1990 1995 2000 2005 2015*150,000
200,000
250,000
300,000
350,000Number of jobs in AK
oil revenue boom
Alaska--Boom, Bust and Moderation
Alaska’s “Great Recession”
1990-“full recovery”-- record annual count begins for 19 years
1988-2008, 21 years
of growth “ends” in
2009
growth resumes in 2010--and record count begins again
*preliminary
Slower Growth In AK
1.3%
1.7%1.5%
0.5% 0.5%0.7%
-0.7%
1.2%
1.7% 1.7%1.9%
2.1%
2010 2011 2012 2013 2014 2015*
Percent employment change from previous year-AK and U.S.
AK U.S.
* Very preliminary-
based on first quarter estimates
*Preliminary- AK based on first 2 quarters
• Alaska economy tepid, but not in recession yet, economists say
• Jeannette Lee Falsey, June 24 2015• Is Alaska's economy in a recession? With oil prices low for more
than a year and resulting state budget cuts, it's a question on the minds of many Alaskans.• Related: • One, Gregg Erickson, declared in a recent report commissioned by the Alaska Mental Health
Trust Authority titled "The Great Alaska Recession" that the state is in the midst of a "major" recession.
• But in a phone interview with the Alaska Dispatch News, Erickson appeared to change his mind.
• "The numbers don't say we're in a great recession," Erickson said. "Maybe we should have couched these conclusions in less dramatic language."
• Other Alaska economists agree there's no recession. Not yet, anyway.• But at the state level, the data for most of those indicators are less accurate or harder to
measure -- or they don't reflect the true health of the Alaska economy. • "We don’t have those more sensitive national numbers and even with them they often get it
wrong," said Neal Fried, an economist at the state Department of Labor.
$40.3$44.9
$49.4$54.9
$49.7$52.7
$56.9 $57.9 $57.3 $57.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Source: BEA
Alaska's GDP Numbers Interesting
$ billions
$24.9 $26.4$28.4
$30.9 $30.9 $32.5$34.9 $36.4 $36.9
$39.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Source: BEA
Alaska's Personal Income Kept Growing
$ billions
16,891 17,065
17,558
17,037
16,390
15,473
14,869 14,689
2008 2009 2010 2011 2012 2013 2014 2015*
Federal Employment Losses In AK Appears To Be Easing
* Very preliminary
Federal employment in Anchorage
-100-200
-300-400
-600
-900
-1100-1200
-1300
Jan Feb Mar Apr May June July Aug Sept
*Total State Government Employment was 25,600 in September
State Government Job Losses Growing-2015
1,650,000
1,700,000
1,750,000
1,800,000
1,850,000
1,900,000
1,950,000
2,000,000
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Visitors
Source: Mcdowell Group
Alaska's Visitor Industry Fully Recovered
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
Workers In Prudhoe Bay
*Only based on first quarter
Prudhoe Bay Employment Counts Have Been At All Time Highs
71%
80%
34%
18%
21%
9%
13%
11%
4%
5%
6%
-2%
Mining
Oil and Gas
Health Care
Seafood*
Professional and Business Srvs.**
Uniformed Military
Leisure and Hospitality
All Employment
Transportation and Utilities
Retail Trade
State and local gov.
Construction
A Decade Of Growth In Alaska
Percentage employment growth by industry, 2004 to 2014
*includes harvesting and processing
+6,600
+8,500
+2,900
+5,100
+3,900
+34,100
+800
+1,800
+3,600
-400
+1,200
+1,800
270306
340379
356 362
416468
492523
465
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015**October 2015
But, Oil Industry Employment Has Begun Falling Nationally
U.S. oil industry employment, (thousands)
Oil and Gas Employment Has Been Falling In Most States
-9% -8% -7% -8%
-20%
-13%
U.S. LA TX CA WY ND
Oil and Gas Employment: Percent Change, August 2014-August 2015
Source: U.S.Department of Labor, Bureau of Labor Statistics, some data adjusted because of lack of detail.
Ranking StateMedian
Household Income-2014
1 Maryland $73,971
2 New Jersey $71,919
3 Alaska $71,583
4 Connecticut $70,048
5 Hawaii $69,592
U.S. 53,657
Part of the Exclusive Club
Source: U.S. Census Bureau, ACS, *=2013
Show Me The Money-It Does Matter Where You Work In AK
$135,445$101,952
$74,904$76,176
$61,984$73,542
$54,529$53,367$53,115$52,850
$42,109$30,251
$22,317
Oil and Gas
Mining
Construction
Federal Government
Transport.& Wareh.
Profess. & Bus. Servs.
Government
Health Care
Financial Industry
AK Average
Manufacturing
Retail Trade
Leisure & Hosp.
Alaska's 2014 average annual earnings
Some Economic Forces That Will Influence what Could Happen In Alaska In 2015 and
Beyond
Natural Gas Prices
Federal Dollars
Oil Prices/Revenues UncertainityOil Industry Activity
Water Pipeline
Decent Commodity Prices
Tourism
U.S. Economy
Our Wealth Tied To Oil Greater Than Probably Anywhere Else
10%13%
5%
19%
14% 14%
24%
Louisiana Texas Colorado Wyoming North Dakota Oklahoma AK
Oil And Gas As A Percent of GDP
Source: U.S.Department of Commerce, BEA. 2013
$0
$20
$40
$60
$80
$100
1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015Sources: Energy Information Administration; Bureau of Labor Statistics
Historical Oil Prices In 2014 DollarsPrice per barrel
$0
$2
$4
$6
$8
$10
$12
$14
1975 1980 1985 1990 1995 2000 2005 2010 2015
Alaska's Historical Oil Revenue Picture
Source: Alaska Department of Revenue
$Billions
Alaska’s Oil Production And Population 1978 - 2017
Peak: 2.05 million barrels in 1988
Low: 525,000barrels
Population: 736,000
Population: 411,600 in 1978
Brought to you by Mark Edwards from Nothrim Bank
This year’s projected deficit is huge.FY15
unrestricted general fund
spending$5.9 billion
$3.4 billion(57% of
spending)
$2.6 billion
Projected deficit
Projected revenues
$8,000per
Alaskan
$4,500per
Alaskan
$3,500per
Alaskan
We pay much lower state taxes than residents of any other state. But we would have to pay much higher taxes to close
our deficit of $4500 per Alaskan.
Alaska
The 1980’s and NowSimilarities• Oil prices fall• Oil revenues fall• Economy remains very
dependent on oil
Differences-Good• Not preceded by economic
and population boom • Problem is not a surprise• Have savings this time• Have more control this time• More economic diversity, a
larger service sector, Native Corps.
• Much lower interest rates• Tax Reform Act of 1986?Differences-Bad• Much less oil production• Falling federal funds and
military?
Still not sure if better, worse or just different? Too early to tell.
Median age=26, 3%>65
AGE
1980
2014
AG E
WomenMen
Baby Boomer
sMillenni
alsGen Z? iGen?
Median age=34, 10%>65
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
1974 1977 1980 1985 1990 1995 2000 2005 2010 2014Source: Municipality of Anchorage
Housing Bubble?Residential building permits,
Permit valuation went form $154 million in 1980 to $1 billion in 1983 ($2.2 billion in todays dollars. 2014 valuation was $674 million.
Alaska’s Population Gains Grew With National Recession--But Now Slowing
7,493 7,4375,586
6,649
11,010
16,037
9,003 8,373
4,471
-61
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Total annual population gains and losses for Alaska
Alaska’s total 2014 population count was 735,601
Alaska’s Migration Tells A Different Story
292
-56-2,023
-1,111
3,009
8,664
1,131 1,113
-2,870
-7,488
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Annual net migration, Alaska
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 201410,000
20,000
30,000
40,000
50,000
60,000Alaska migration
Comers Goers
Alaska Churn--The Number Of Folks Moving In And Moving Out Of AK Each Year
Sourc e: Alask a Department of Labor and Work force Development, Researc h and Analys is Sec tion, Alask a Hous ing Finance Corporation, MLS.
727 landing draws crowd
100,000
120,000
140,000
160,000
180,000
200,000
220,000
240,000Number of registered pickups in Alaska
We Remain Solidly AKers When It Comes To Our Pickups
49,530 snow machines, peaked at 55,249 in 2008
An Economic Comeback Kid --Toying with Gold Rush Peak
Gold production in thousands of troy ounces, 1900 to 2014
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 20140
200
400
600
800
1,000
1,200
Source: Alaska Department of Natural Resources, Division of Geological and Geophysical Surveys
1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 20150
0.5
1
1.5
2
Alaska's oil productiion daily production-millions of barrels
Currently Our Largest Challenge-And It Is Huge
Source: Alaska Department of Labor and Workforce Development, Research and Analysis Section; Alaska Department of Revenue, Tax Division
But Laurence C. Smith warms right to it in “The World in 2050: Four Forces Shaping Civilization’s Northern Future” (Plume, 2010). He’s a professor of earth, planetary, and space sciences at UCLA, and used model projections and data to form his main thesis: Countries north of the equator will grow ever more powerful, while countries to the south will vie for survival. Indeed, boomtowns will pop up in Alaska, Canada, Greenland, Russia and Scandinavia. As the permafrost melts, we’ll build roads, bringing construction jobs and a real estate rush.
Forecasting the futureTuesday, January 27, 2015
AK’s and Nation's Unemployment RateRelationship Returning to “Normal”
2006 2007 2008 2009 2010 2011 2012 2013 2014 20150%1%2%3%4%5%6%7%8%9%
10%11%12%
Unemployment rate
Alaska U.S.
Alaska
U.S.
“Work is about a search for daily meaning as well as daily bread.” Studs Terkel
Ranking State Ranking 1978 (before oil)
50th Alaska 3rd
49th New Hampshire
48th Tennessee
47th Delaware
46th Alabama
Alaska Now Enjoys The Nation’s Lowest State and Local Tax Burden
Source:Tax Foundation
Health Care Just Keeps Marching On
19,90021,800
23,20025,300
27,000 27,900 28,700 29,000 29,400 30,40031,800
33,200
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
AK Health care employment
Source: Alaska Department of Labor and Workforce Development, Research and Analysis. Includes private and public sector employment..
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000 Uniformed Military-Anchorage
*rough forecst
Anchorage's Military Numbers--Good News! Maybe
Troop cuts at Joint Base Elmendorf-Richardson on
hold
0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 88-300
-200
-100
0
100
200
300At What Age Do People Move In And Out Of Alaska?
Net migration (people moving in minus people moving out)
Age
College exodus, etc.
Military,other work,etc.
Retirement,etc.
In 2027-- Here Is How Many Of Us There Might Be--By Age
33,600
-4,900
19,300
13,300
-25,000
70,600
0-19
20-29
30-39
40-44
45-59
'+60
Population projections 2012-2027
Sources: AKDOWL, R&A and U.S. Census Bureau
Age
