Over breakfast Thursday morning at the Chamber’s January Alaska Business Forum, experts Neal Fried and Mouhcine Guettabi painted an economic outlook in clear and concise terms – and discussed industries including construction, oil and gas, professional business services, and other trades that provide growth in Alaska.
Fried and Guettabi presented data on job growth and loss, past recessions and timelines, residential rates, population projections, and migration in the 49th state.
Both forecast an end to Alaska's recession in 2019 but noted that the end of a recession means the beginning of recovery, and that recovery can be slow.
Their presentations included their latest findings for the Alaskan economy.
Highlights by speaker:
• Mouhcine Guettabi, Assistant Professor of Economics at the Institute of Social and Economic Research
Guettabi walked attendees through his forecast for Alaska, joking that “forecasting is half science, half art, and I’m not an artist.” He forecast that Alaska turns a corner in 2019. Several positive signs indicate the recession is coming to an end. However, Guettabi cautioned, the path to recovery will be slow, and his forecast is conditional on oil prices behaving and no massive budget cuts.
In the short-term, Alaska state government faces a $1.6 billion deficit, and Guettabi predicted a decrease in state government employment. While much of the conversation centered on employment loss, he noted that long-term structure losses could also be expected while reducing the budget deficit.
Speaking to employment trends more generally, Guettabi reviewed data and noted that since the start of the recession, the state lost 1.82 percent of its jobs in 2016 and another 1.25 percent in 2017. This loss is consistent with those of other oil-producing states. “Oil states are the ones that lost a considerable number of jobs” between 2015 and 2017, Guettabi noted. The state also lost jobs in 2018, he said, though final numbers weren’t in. Overall, cumulative wages decreased in Alaska between 2015 and 2017.
For transparency, Guettabi showed attendees graphs of how his forecasts performed historically, noting some discrepancy. He also discussed the Alaska Permanent Fund, which is heavily invested in stocks ($24 million of $61 million invested in stocks).
• Neal Fried, Economist from the Alaska Department of Labor
Fried said his forecast was a little less optimistic than Guettabi’s. However, he similarly expects the recession to end in 2019. Fried emphasized the end of the recession does not mean recovery.
Recovery usually takes four or five years, he said, and Alaska has much ground to gain back.
He felt construction couldn’t fall further. Alaska’s transportation employment record has stayed positive throughout the recession, Fried noted, saying that was sort of “amazing.” Alaska is often showed negatively in the media, eyeing unemployment. He said when considering Alaska’s unemployment rate, the high seasonality of jobs should be considered.
Numbers of uniformed military members in Alaska are stable, Fried said. Also stable (both historically and in forecasts) were mining employment numbers.
Fried spoke about a new press release published Thursday on migration loss in Alaska. Alaska’s population decreased by 1,608 people – 0.2 percent – from July 2017 to July 2018, based on population estimates released by the Alaska Department of Labor and Workforce Development.
This marks the second year of decline for the state’s total population, and has had implications for housing. Vacancy rates have increased as Alaska loses residents. Furthermore, not a lot of housing stock has been added in Alaska, said Fried, and in Anchorage, Alaska's largest city, there has been even less.