alaska's economy: then and now · oil begins flowing through the pipeline alaska recession...
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General OverviewA little bit of context: a historical perspective
What can we say about the near future?
Alaska’s Economy: Then and Now
Mouhcine Guettabi, PhD
Institute of Social and Economic ResearchUniversity of Alaska Anchorage
10/11/2017
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?
Outline
1 General OverviewAlaska’s Economy and Demographics:Then and Now
2 A little bit of context: a historical perspectiveConsiderable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
3 What can we say about the near future?Where do we go from here?
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?Alaska’s Economy and Demographics:Then and Now
Outline
1 General OverviewAlaska’s Economy and Demographics:Then and Now
2 A little bit of context: a historical perspectiveConsiderable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
3 What can we say about the near future?Where do we go from here?
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?Alaska’s Economy and Demographics:Then and Now
Alaska as a state used to be known for rising employmentand population, characterized by periods of boom andbust such as the construction of the trans-Alaska oilpipeline in the mid-1970s, the recession followingcompletion of the pipeline in the late 1970s, thegovernment spending and construction driven boom of theearly 1980s, and the oil price crash driven deeprecession of the late 1980s. While true once, that pictureis no longer true.
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?Alaska’s Economy and Demographics:Then and Now
Big Savings account
Alaska has built a very big savings account. In 1976,Alaskans voted to put part of the state’s oil revenues into aspecial account the legislature couldn’t spend. With thatdecision, Alaskans used temporary oil revenues to create apermanent asset. As of October 5th, 2017 the PermanentFund had a balance of close to 62 billions.
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?Alaska’s Economy and Demographics:Then and Now
Snapshot of how much Alaska has changed
1970 2016/2017
Wage employment 130,000 361,183Savings account 0 $62 billion
Population 304,000 737,000
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?Alaska’s Economy and Demographics:Then and Now
Slow and steady
For the past quarter-century, Alaska’s economy has beencharacterized by relatively slow and steady growth inpopulation and employment driven by growth across manysectors such as the federal government, mining, tourism,air cargo, healthcare, and retail trade, and with significantregional variation.
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?Alaska’s Economy and Demographics:Then and Now
What about now? Alaska’s situation in numbers
Alaska’s Fiscal and Economic Situtation by the numbersBudget and economy
2013 2014 2015 2016 2017
Unrestricted GF revenues 6.9 5.39 2.25 1.53 1.64
Wage and Salary Employment 335,366 336,640 338,262 332,138 324,498
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?Alaska’s Economy and Demographics:Then and Now
Dimensions of change
Alaska has considerably changed along almost alldimensions.Quality of life has improved significantly.Alaskans are richer, more likely to own a home, and lesslikely to be male than 50 years ago.
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?Alaska’s Economy and Demographics:Then and Now
Dimensions of change
Alaska has considerably changed along almost alldimensions.Quality of life has improved significantly.Alaskans are richer, more likely to own a home, and lesslikely to be male than 50 years ago.
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?Alaska’s Economy and Demographics:Then and Now
Dimensions of change
Alaska has considerably changed along almost alldimensions.Quality of life has improved significantly.Alaskans are richer, more likely to own a home, and lesslikely to be male than 50 years ago.
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?
Considerable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
Outline
1 General OverviewAlaska’s Economy and Demographics:Then and Now
2 A little bit of context: a historical perspectiveConsiderable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
3 What can we say about the near future?Where do we go from here?
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?
Considerable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
Does Alaska still have considerably more men?
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2011 2012 2013 2014 2015 2016
Alaska population by gender: 1900-2016
Female
Male
The share of the male population decreased from 0.72 in 1900 to 0.51 in 2016. In fact, the male to female ratio has been less than 1.2 since 1970 and is currently at 1.06.
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?
Considerable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
What about the age distribution?
24.58%22.54% 24.28%
20.26%
2.55% 3.62% 5.23% 7.00%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
1980 1990 2000 2010
Age distrbitution by decade1980-2010
Less than 5
5 to 18
19 to 65
Over 65
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?
Considerable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
Alaska evolution: homeownership
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
1950 1960 1970 1980 1990 2000 2010 2011 2012 2013 2014 2015 2016
Homeownership rates for Alaska and the United States1950-2016
AK
US
Homeownership rates increased from 50 to 58% between 1970 and 1980 census. Another significant jump occurred between 1990 and 2000
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?
Considerable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
Alaska evolution: crowding
30.50%
19.40% 19.60%
10.10%8.60% 8.60%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
1940 1950 1960 1970 1980 1990 2000
Slighly different measures of economic stabilityCrowding: 1940-2000
US
Alaska
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?
Considerable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
Alaska evolution: neighborhood stability
25.80%23.30%
21.50%
13.20%11.90%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
1960 1970 1980 1990 2000
Turnover and neigborhood stability1960-2000
AK
US
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?
Considerable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
Nonperforming loans: Now and Then
17.29%
4.77%
1.09%
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00
1/1
/19
84
1/1
/19
85
1/1
/19
86
1/1
/19
87
1/1
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88
1/1
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89
1/1
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90
1/1
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91
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92
1/1
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93
1/1
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94
1/1
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1/1
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96
1/1
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1/1
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98
1/1
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99
1/1
/20
00
1/1
/20
01
1/1
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02
1/1
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1/1
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1/1
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1/1
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14
1/1
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15
1/1
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1/1
/20
17
Percent of nonperforming loans ( past due 90+ days) relative to total loans
Periods of loan distress: -During the 1980's recession, the percent of nonperforming loans peaked at 17.29%. - During the great recession, they peaked at 4.77%. - So far in this current recession, the percent of nonperforming loans has peaked at 1.09% in 2017.
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?
Considerable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
Outline
1 General OverviewAlaska’s Economy and Demographics:Then and Now
2 A little bit of context: a historical perspectiveConsiderable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
3 What can we say about the near future?Where do we go from here?
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?
Considerable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
Major events
Pipeline construction begins
First PFD distributed
Oil begins flowing through the pipeline
Alaska recession begins, following crash in oil prices
Continuous period of employment growth from 1989 to 2008averaging 1.8% per year
First year of negative growth in two decades
Period of very slow growthbefore recession
01
00
,00
02
00
,00
03
00
,00
04
00
,00
0
Wa
ge
an
d S
ala
ry E
mplo
ym
ent (1
96
9-2
01
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19
58
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00
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15
Wage and Salary Employment in AlaskaSignificant Economic Events Between 1959 and 2015
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?
Considerable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
What about wages?
57,979
74,700
The average wage growthbetween 2000 and 2015 was 0.73%
0 20,000 40,000 60,000 80,000Average wages and salaries
20152014201320122011201020092008200720062005200420032002200120001999199819971996199519941993199219911990198919881987198619851984198319821981198019791978197719761975197419731972197119701969
1969 to 2015
Real average wage and salaries
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?
Considerable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
What do we know about the current economicsituation?
We are in the middle of the second year of the recession.The contraction has spread from Oil and Gas,Construction, and Government to the rest of the economyin this last year.Most boroughs and census areas are feeling the squeeze.
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?
Considerable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
What do we know about the current economicsituation?
We are in the middle of the second year of the recession.The contraction has spread from Oil and Gas,Construction, and Government to the rest of the economyin this last year.Most boroughs and census areas are feeling the squeeze.
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?
Considerable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
What do we know about the current economicsituation?
We are in the middle of the second year of the recession.The contraction has spread from Oil and Gas,Construction, and Government to the rest of the economyin this last year.Most boroughs and census areas are feeling the squeeze.
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?
Considerable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
Basic picture: Economic contraction
-1.8%
-2%
-1%
0%
1%
2%
Yearly
em
plo
ym
entgro
wth
rate
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
Employment growth rate using QCEW
at the state level2002-2016 -1.81%
5%-5% 20%10%0%-10%Growth rate
Yukon
Yakutat
Wrangel
Valdez
Southeast Fairbanks
Skagway
Sitka
POW
Petersburg
Northwest Arctic
North Slope
Nome
Matsu
Lake and Pen
Kusilvak
Kodiak
Ketchikan
Kenai
Juneau
Hoonah-Angoon
Haines
Fairbanks
Dillingham
Denali
Bristol Bay
Bethel
Anchorage
Aleutians West
Aleutians East
Alaska
2015-2016
Employment growth rate at the borough level
We lost 6,221 jobs between 2015 and 2016
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?
Considerable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
Inside the numbers
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?
Considerable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
Outline
1 General OverviewAlaska’s Economy and Demographics:Then and Now
2 A little bit of context: a historical perspectiveConsiderable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
3 What can we say about the near future?Where do we go from here?
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?
Considerable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
How are the hardest hit sectors doing relative to 2014?
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?
Considerable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
Outline
1 General OverviewAlaska’s Economy and Demographics:Then and Now
2 A little bit of context: a historical perspectiveConsiderable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
3 What can we say about the near future?Where do we go from here?
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?
Considerable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
How is Government doing relative to 2014?
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?
Considerable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
Outline
1 General OverviewAlaska’s Economy and Demographics:Then and Now
2 A little bit of context: a historical perspectiveConsiderable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
3 What can we say about the near future?Where do we go from here?
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?
Considerable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
How are spending dependent sectors doing relative to2014?
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?Where do we go from here?
Outline
1 General OverviewAlaska’s Economy and Demographics:Then and Now
2 A little bit of context: a historical perspectiveConsiderable change in a few decadesHistorical employmentPrivate sector decline: Wave 1GovernmentPrivate sector: Wave 2
3 What can we say about the near future?Where do we go from here?
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?Where do we go from here?
Preliminary projections
-1.81%
-2.3%
-0.7%
These projections do not includemajor cuts or added taxes
-2%
-1%
0%
1%
2%
gro
wth
rate
200
0
200
5
201
0
201
5
201
6
201
7
201
8
201
9
202
0
year
Actual Growth Rate Forecast
Wage and Salary employment growth projections
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?Where do we go from here?
Major decisions ahead
Alaska is slowly becoming a state dependent on a financialasset.Need for new revenues is inevitable.While the economy has weakened, the fundamentals arestill sound.Delaying a decision means more uncertainty.The good news is that the state has options that aresustainable.
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?Where do we go from here?
Major decisions ahead
Alaska is slowly becoming a state dependent on a financialasset.Need for new revenues is inevitable.While the economy has weakened, the fundamentals arestill sound.Delaying a decision means more uncertainty.The good news is that the state has options that aresustainable.
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?Where do we go from here?
Major decisions ahead
Alaska is slowly becoming a state dependent on a financialasset.Need for new revenues is inevitable.While the economy has weakened, the fundamentals arestill sound.Delaying a decision means more uncertainty.The good news is that the state has options that aresustainable.
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?Where do we go from here?
Major decisions ahead
Alaska is slowly becoming a state dependent on a financialasset.Need for new revenues is inevitable.While the economy has weakened, the fundamentals arestill sound.Delaying a decision means more uncertainty.The good news is that the state has options that aresustainable.
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?Where do we go from here?
Major decisions ahead
Alaska is slowly becoming a state dependent on a financialasset.Need for new revenues is inevitable.While the economy has weakened, the fundamentals arestill sound.Delaying a decision means more uncertainty.The good news is that the state has options that aresustainable.
Mouhcine Guettabi Basics
General OverviewA little bit of context: a historical perspective
What can we say about the near future?Where do we go from here?
Thank you
Thank You
Mouhcine Guettabi
Phone Number :907-786-5496email : mguettabi@alaska.edu
Mouhcine Guettabi Basics
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