Alaska’s overall economic performance among the worst in US for several years, research finds

Over the past seven years, the Alaskan economy has performed “at or near the lowest levels” nationally on four key measures of economic health, according to a report released Thursday by the Centers for Disease Control and Prevention. Economics of the University of Alaska.

Taken together, the state’s poor performance from 2015 to 2021 — in terms of job growth, unemployment rate, net migration, and gross domestic product — puts Alaska’s economic health at the bottom. Nolan Klouda, executive director of the center and lead author of the 10-page report covering all 50 states and the District of Columbia.

“You could say Alaska is the worst performing state since 2015. “I think it is,” Klouda said in an interview on Thursday.

The report concludes, “by all measures presented here… Alaska’s economy appears to be stuck in a rut relative to the rest of the United States.”

“This underperformance puts Alaska near or near the bottom of all states and DC between 2015 and 2021, as well as the period affected by the pandemic from 2020 to present,” the report said. know. “This marks seven years of weak or negative growth as measured by (gross domestic product, the total value of all goods and services produced) and employment, as well as the highest net emigration rate. than any state or DC.”

The report is a brief but unsettling look at those economic indicators in Alaska and across the country. It does not explore policy solutions. It cites years-low oil prices as the main culprit, although that price has improved in recent months. Oil prices are key to Alaska’s revenue, and higher prices drive funding for valuable oil projects.

Klouda, in the interview, offered several ideas to help turn the situation around, including continuing to diversify the state’s economy and allocating revenue to areas that could attract people to Alaska, such as investing to improve the education system.

He also pointed out that the “harsh” 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 Anchorage Economic Development, says the report paints a clear and accurate picture of the state and Anchorage’s economic challenges. Net migration — more people leaving Alaska than coming in, he said — is a particularly troubling issue that hinders the economic recovery due to a lack of available labor.

The bright spots include improvements in employment in recent months, including in the oil industry, with major oil projects underway that are expected to create thousands of jobs, Popp said. and the industry’s growing focus on marketing state properties to prospective employees. may move here, such as in the tourism and health sectors.

“I think it’s a call to action, that we can no longer say this is a cycle and the economy will be better next year,” Popp said. “We have much to be optimistic about, but we don’t have the workforce to take advantage of the opportunities we need.”

gross domestic product

The report says gross domestic product is the “headline” measure of the economy’s health.

“From 2015 to 2021, state GDP fell 7.1%, the second largest decline among the 50 states plus the District of Columbia,” the report said.

During the same period, US GDP grew 12.8%.

Alaska’s gross domestic product shrank during the pandemic. A measure of real gross domestic product for the last three months in Alaska was 7.7% lower than pre-pandemic levels, the lowest of all 50 states and the District of Columbia, the report said. Nationally, gross domestic product was 4.8% higher than during the same period.

Last year, Alaska’s GDP was $57.3 billion, the smallest of all states except Wyoming and Vermont, which have smaller populations than Alaska.

Job growth

The report said Alaska ranked last in terms of job growth, just ahead of North Dakota.

“While the rest of the country experienced job growth, employment in Alaska fell 8% from 2015 to 2021,” the report said.

As of August, Alaska’s employment was 3.9% below pre-pandemic levels, compared with 0.2% growth nationally. The report said only Vermont, the District of Columbia and Hawaii ranked lower.

Unemployment

Alaska had the highest unemployment rate of any state from 2017 to 2019 and has remained above the national average during the pandemic.

“For the period 2015 to 2021, Alaska had the second-highest average unemployment rate at 6.5%, compared with 5.1% for the entire United States,” the report said. “Only Nevada is worse in 7.2%.”

“One surprising aspect of the post-pandemic recovery is the low unemployment rate across the United States,” it said. “In September 2022, Alaska’s unemployment rate was just 4.4% — a very low rate by historical standards, but still the fourth-highest rate of all states and DC.”

net migration

More people have left Alaska than moved here each year between 2012 and 2021, another sign that the economy is shrinking.

“Alaska’s average annual net migration rate from 2015 to 2021 is the lowest of any state,” the report said.

During that period, Alaska lost about 9 residents per 1,000 people, while the United States gained about 2.2 residents per 1,000 people.

the effect of oil

Klouda in the interview expanded on the broad impact of oil prices on the economy. He said prices, coupled with low oil production compared to decades ago, hurt government revenues and the state’s gross domestic product. In addition, severe job losses at oil and gas companies have only slightly recovered, eliminating many of the high-paying jobs that support other aspects of the economy.

“The relative weakness in oil prices is probably the biggest factor in all of these (indicators),” he said.

An unprecedented time

Klouda and Popp say the state’s economic performance is unprecedented, at least in recent Alaskan history.

Popp said Alaskan net migration has continued for an unusually long number of years. A key factor, he said, is the lack of people moving to Alaska, a situation that can be addressed with appropriate investments to improve service in Anchorage and the state.

“One problem is that our wages are not as high as they used to be,” he said. “And so many cities and states have reinvested in themselves, providing great schools, vibrant downtowns and community environments as well as walkable neighborhoods, things that Young generation is looking for. There’s a lot of competition for the workforce across the country and we haven’t invested in ourselves.”

Klouda says Alaska’s economy suffered a severe collapse in the 1980s, but the downturn was marked by “slow, heavy attrition” of job challenges, people leaving the state and gross domestic product fell.

[‘Slow strangulation’: Alaska school districts face fiscal cliff with high inflation and flat funding]

He says the slow boil means many Alaskans are fine.

But the consequences are mounting, affecting public service investments in things like education that can enhance quality of life and help keep people in Alaska, he said.

One result of the state’s struggling economy can be seen in the Anchorage School District proposal to close schools, due to fewer students, net migration, and years of fixed funding. state regulations for public education, resulting in limited state revenue, Klouda said.

“This data is already known, but we see value in putting it all together,” he said of the report. “Rather than providing discrete facts, we wanted to put this information together to paint a really clear picture of our economic situation.”

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