Alaska is one of last energy-dependent states to emerge from recession
by Michelle Saport |
Since the rapid decline in oil prices, Alaska has experienced 34 straight months of negative growth making it by far Alaska's longest recession. Only North Dakota, with 37 straight months of negative growth has had a longer period of employment decline according to a new analysis of how oil prices influence Alaska and other energy-dependent states by Mouhcine Guettabi, associate professor of economics at UAA's Institute of Social and Economic Research (ISER).
"We are likely entering the end phase of the recession," Guettabi says, though he cautions that it is best to think about the state re-entering a period of low to no growth since the two sectors that are typically the catalysts of Alaska recovery, government and oil and gas, are still weakened.
Between July 2015 and July 2018, Alaska lost 12,500 jobs with the Oil and Gas sector shrinking to 75.5 percent of its size in 2014. Although small improvements are being observed in 2018 in the Oil and Gas, Professional and Business, and Construction sectors, these sectors are still considerably smaller than they were prior to the 2014 decline in oil prices.
Only six of the 13 energy states experienced economy-wide job losses. Those states are Alaska, Louisiana, North Dakota, Oklahoma, Wyoming, and West Virginia. Louisiana, Oklahoma, and Wyoming have recovered with Louisiana and Oklahoma employment levels exceeding those of 2014.
"In general, our analysis shows that the states most dependent on oil revenues both through the private sector and government revenues are the ones to have had the longest recessions," Guettabi writes. "The decision in Alaska to fund a portion of government services from non-oil revenues should partially shelter the economy from future oil price drops."
Guettabi's analysis of the impact of oil prices on Alaska and other energy-dependent states, is the first of three planned reports. A forecast of the statewide economy with forecasts for Anchorage, Fairbanks, Juneau, and the Mat-su is scheduled for release in November 2018. In January 2018, a report focused on the Permanent Fund and its sensitivity to different withdrawal amounts, rates of return and inflation-proofing mechanisms is planned. All three analyses are supported with funding from Northrim Bank.
Download the full report at the ISER website.