For the past seven years, Alaska’s economy has performed “at or near the bottom” nationally in four key measures of economic health, according to a report released Thursday by the University of Alaska Center for Economic Development.
Taken together, the state’s poor performance between 2015 and 2021 — in job growth, unemployment, net migration and gross domestic product — puts Alaska’s economic health at the bottom. all 50 states and the District of Columbia, said Nolan Klouda, the center’s executive director and lead author of the 10-page report.
“You could make a case that Alaska is the lowest performing state going back to 2015,” Klouda said in an interview Thursday. “I think that.”
The report concludes, “by every measure presented here … Alaska’s economy appears to be stuck in a rut compared to the rest of the US”
“This underperformance puts Alaska at or near the bottom of all states and DC for the period from 2015 to 2021, as well as the pandemic-affected period from 2020 to the present,” he says. “This represents seven years of weak or negative growth as measured by (gross domestic product, the total value of all goods and services produced) and employment, and the highest rate of emigration of any state or DC”
The report is a brief but troubling look at those economic indicators in Alaska and nationally. It does not explore policy solutions. He blames years of low oil prices as the main culprit, although those prices have improved in recent months. Oil prices are critical to the state of Alaska’s revenue and higher prices provide funding for valuable oil projects.
Klouda, in the interview, offered several ideas to help change the situation, including continued diversification of the state’s economy and allocation of revenue in areas that can attract people to Alaska, such as investments to improve the education system.
He also pointed out that the “stark” picture of the state’s economy in the report is based on the performance of the rest of the US during a period of relatively strong economic health nationally.
Bill Popp, head of the Anchorage Economic Development Corp., said the report provides a clear and accurate picture of the state’s and Anchorage’s economic challenges. Net emigration — more people leaving Alaska than coming — is a particularly troubling issue that hinders economic recovery through a lack of available workers, he said.
Bright spots, Popp said, include improvements in employment in recent months, including in the oil industry, with major oil projects on the horizon expected to create thousands of jobs, and increased industry emphasis on marketing attributes the state for potential employees. move here, for example in tourism and in the field of medicine.
“I think it’s a call to action for the public, that we can no longer say this is a cycle and the economy will improve next year,” Popp said. “There’s a lot to be optimistic about, but we don’t have the workforce to take advantage of those opportunities that we need.”
Gross domestic product
Gross domestic product is the “frontline” measure of economic health, the report says.
“From 2015 to 2021 the state’s GDP declined by 7.1%, the second largest decline of all 50 states plus the District of Columbia,” the report states.
Over the same time, US GDP grew 12.8%.
Alaska’s gross domestic product declined during the pandemic. A recent three-month measure of real gross domestic product in Alaska was 7.7% below pre-pandemic levels, the lowest of all 50 states and the District of Columbia, the report says. Nationally, gross domestic product was 4.8% higher over the same period.
Last year, Alaska’s GDP was $57.3 billion, the smallest of the states except Wyoming and Vermont, the states with smaller populations than Alaska.
Alaska is ranked last in job growth, just ahead of North Dakota, the report says.
“While employment grew in the rest of the country, Alaska employment fell by 8% from 2015 to 2021,” the report says.
In August, Alaska employment was 3.9% below pre-pandemic levels, compared to .2% growth nationally. Only Vermont, the District of Columbia and Hawaii ranked lower, the report says.
Alaska had the highest unemployment rate of any state from 2017 to 2019, and it remained above the national average during the pandemic.
“Over the 2015 to 2021 time period, Alaska had the second highest average unemployment rate at 6.5%, versus 5.1% for the US as a whole,” the report states. “Only Nevada was worse at 7.2%.”
“One surprising aspect of the pandemic recovery is low unemployment rates across the US,” he says. “As of September 2022, Alaska’s unemployment rate was only 4.4% – a very low rate by historical standards, but still the fourth highest state and DC.”
More people have left Alaska than moved here every year from 2012 to 2021, another sign of a contracting economy.
“Alaska’s average annual net migration rate between 2015 and 2021 is the lowest of any state,” the report states.
During that period, Alaska lost about nine residents per 1,000, while the US gained about 2.2 residents per 1,000.
Effect of Oil
Klouda expanded in the interview on the broad impact of oil prices on the economy. He said prices, along with low oil production compared to previous years, would hurt government revenue and the state’s gross domestic product. Also, sharp job losses in oil and gas companies, which eliminated many high-paying jobs that support other aspects of the economy, saw only a mild recovery.
“The relative weakness of oil prices is probably the biggest factor in all these indicators,” he said.
An unprecedented period
Klouda and Popp said the state’s economic performance is unprecedented, at least in recent Alaska history.
Popp said net emigration of Alaskans has continued for several unusually long years. The main factor is the lack of people moving to Alaska, a situation that can be addressed with the right investments to improve services in Anchorage and the state, he said.
“One issue is that our wages are not as strong as they used to be,” he said. “And many cities and states have reinvested in themselves, providing great schools, vibrant downtowns and community settings and walkable neighborhoods, which younger generations are looking for. There is a lot of competition for the workforce nationally and it has become apparent that we have not invested in ourselves.”
Klouda said Alaska’s economy fell sharply in the 1980s, but the downturn is characterized by “slow hiring, grinding” employment challenges, people leaving the state and falling gross domestic product.
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The slow boil means many Alaskans are still doing OK, he said.
But the consequences are mounting, affecting public service investments in things like education that can boost quality of life and help keep people in Alaska, he said.
One result of the state’s struggling economy is seen in the Anchorage School District’s proposal to close schools, due to fewer students, net emigration and several years of flat state funding for public education, due to limited revenue of the state, Klouda said. .
“This data is known, but we saw value in putting it together,” he said of the report. “Instead of providing scattered facts, we wanted to put this information together to create a really clear picture of how our economy is doing.”
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