ISER's Mouhcine Guettabi provides context on governor's vetoes and potential impact on Alaska economy

In a recent series of tweets (and at the July 8, 2019 'Make it Monday' forum), ISER's Mouhcine Guettabi, associate professor of economics, provided context on Governor Dunleavy's vetoes and potential impact on the Alaska economy:

A little bit of context on the vetoes and their potential impact on the Alaska economy in the short run. I think focusing on the short run misses a lot but I got a number of questions about the economic impact. I think the long run is what matters but here it goes.

The Alaska economy experienced 36 straight months of employment decline from October 2015 to September 2018. The overall number of jobs lost between Sept 2015 and Sept 2018 is 12,400.

Since October 2018, the Alaska economy has experienced 8 straight months of employment growth. During that period, the average monthly employment growth was 1,325 jobs.

The proposed vetoes total about 450 million dollars which means that they should amount to at least 4500 of jobs lost in the short run based on some of our previous work. The actual job losses may be much larger if the agencies affected all lay off workers.

The graph below shows that **just** the UA DIRECT cuts without accounting for all the other line item vetoes (Medicaid, K-12, seniors, debt reimbursement,etc) essentially pushes the Alaska economy back into a recession.

This tells us that once we account for all the cuts and their indirect and induced effects, there is a very strong likelihood that the economy will dip back into a recession.

Again the short term effects pale in comparison to the long term considerations but they are worth knowing.

July Archive