Transcript Fall 2015 Trends

Alaska’s Economic Landscape
The rise of coffee shops in AK
AGFOA Fall Conference
November, 16th, 2015
Alaska Department of Labor and Workforce Development, Research Section, Neal Fried,
Economist
Alaska--Boom, Bust and Moderation
350,000
Number of jobs in AK
grow th resum es in 2010--and record count begins again
1988-2008,
21 years
of grow th
“ends” in
2009
300,000
250,000
1990-“full recovery”-- record annual count begins
for 19 years
200,000
Alaska’s “Great Recession”
oil revenue
boom
150,000
1980
1985
1990
1995
2000
2005
2015*
*prelim inary
Slower Growth In AK
Percent employment change from previous year-AK and U.S.
AK
U.S.
1.7%
1.3%
1.5%
1.7%
2.1%
1.9%
1.7%
1.2%
0.5%
0.5%
0.7%
-0.7%
2010
2011
2012
2013
2014
2015*
*Preliminary- AK based on first 2 quarters
• Alaska economy tepid, but not in recession yet,
economists say
• Jeannette Lee Falsey, June 24 2015
• Is Alaska's economy in a recession? With oil prices low for more
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than a year and resulting state budget cuts, it's a question on the minds of many Alaskans.
Related:
One, Gregg Erickson, declared in a recent report commissioned by the Alaska Mental Health
Trust Authority titled "The Great Alaska Recession" that the state is in the midst of a "major"
recession.
But in a phone interview with the Alaska Dispatch News, Erickson appeared to change his
mind.
"The numbers don't say we're in a great recession," Erickson said. "Maybe we should have
couched these conclusions in less dramatic language."
Other Alaska economists agree there's no recession. Not yet, anyway.
But at the state level, the data for most of those indicators are less accurate or harder to
measure -- or they don't reflect the true health of the Alaska economy.
"We don’t have those more sensitive national numbers and even with them they often get it
wrong," said Neal Fried, an economist at the state Department of Labor.
Alaska's GDP Numbers Interesting
$ billions
$56.9 $57.9 $57.3 $57.0
$54.9
$49.7
$49.4
$52.7
$44.9
$40.3
2005
2006
2007
2008
2009
2010
2011 2012 2013
Source: BEA
2014
Alaska's Personal Income Kept Growing
$ billions
$24.9
2005
$26.4
2006
$28.4
2007
$30.9 $30.9
2008
2009
$32.5
2010
$34.9
2011
$36.4 $36.9
2012
$39.0
2013 2014
Source: BEA
Federal Employment Losses In AK Appears To Be
Easing
Federal employment in Anchorage
17,558
16,891
17,065
17,037
16,390
15,473
14,869
2008
2009
2010
2011
2012
2013
2014
14,689
2015*
* Very preliminary
State Government Job Losses Growing-2015
Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
-100
-200
-300
-400
-600
-900
-1100
-1200
*Total State Government Employment was 25,600 in September
-1300
Alaska's Visitor Industry Fully
Recovered
2,000,000 Visitors
1,950,000
1,900,000
1,850,000
1,800,000
1,750,000
1,700,000
1,650,000
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
Source: Mcdowell Group
Prudhoe Bay Employment Counts Have Been At
All Time Highs
14,000
Workers In Prudhoe Bay
12,000
10,000
8,000
6,000
4,000
2,000
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
*Only based on first quarter
A Decade Of Growth In Alaska
Percentage em ploym ent grow th by industry, 2004 to 2014
71%
Mining +1,200
Oil and Gas
+6,600
80%
34%
Health Care +8,500
Seafood* +2,900
18%
21%
Professional and Business Srvs.** +5,100
9%
Uniform ed Military +1,800
13%
Leisure and Hospitality +3,900
11%
All Em ploym ent +34,100
Transportation and Utilities +800
4%
Retail Trade +1,800
5%
State and local gov. +3,600
6%
Construction
-2% -400
*includes harvesting and processing
But, Oil Industry Employment Has Begun Falling
Nationally
U.S. oil industry employment, (thousands)
468
492
523
465
416
379
340
356
362
2009
2010
306
270
2005
2006
2007
2008
2011
2012 2013 2014 2015*
*October 2015
Oil and Gas Employment Has Been Falling
In Most States
Oil and Gas Employment: Percent Change, August 2014-August 2015
-9%
-8%
-7%
-8%
-13%
-20%
U.S.
LA
TX
CA
WY
ND
Source: U.S.Department of Labor, Bureau of Labor Statistics, some data adjusted because of lack of detail.
Part of the Exclusive Club
Ranking
State
Median
Household
Income-2014
1
Maryland
$73,971
2
New Jersey
$71,919
3
Alaska
$71,583
4
Connecticut
$70,048
5
Hawaii
$69,592
U.S.
53,657
Source: U.S. Census Bureau, ACS, *=2013
Show Me The Money-It Does Matter Where You
Work In AK
Alaska's 2014 average annual earnings
$135,445
Oil and Gas
$101,952
Mining
$74,904
Construction
$76,176
Federal Government
$61,984
Transport.& Wareh.
$73,542
Profess. & Bus. Servs.
Government
$54,529
Health Care
$53,367
Financial Industry
$53,115
$52,850
AK Average
$42,109
Manufacturing
Retail Trade
Leisure & Hosp.
$30,251
$22,317
Some Economic Forces That Will Influence
what Could Happen In Alaska In 2015 and
Beyond
Natural Gas Prices
Federal Dollars
Oil Prices/Revenues Uncertainity
Oil Industry Activity
Water Pipeline
Decent Commodity Prices
Tourism
U.S. Economy
Our Wealth Tied To Oil Greater Than
Probably Anywhere Else
Oil And Gas As A Percent of GDP
24%
19%
14%
13%
14%
10%
5%
Louisiana
Texas
Colorado
Wyoming North Dakota Oklahoma
Source: U.S.Department of Commerce, BEA. 2013
AK
Historical Oil Prices In 2014 Dollars
Price per barrel
$100
$80
$60
$40
$20
$0
1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
Sources: Energy Information Administration; Bureau of La bor Statistics
Alaska's Historical Oil Revenue Picture
$Billions
$14
$12
$10
$8
$6
$4
$2
$0
1975
1980
1985
1990
1995
2000
2005
2010
2015
Source: Alaska Department of Revenue
Alaska’s Oil Production And
Population 1978 - 2017
Peak: 2.05 million barrels in 1988
Population:
736,000
Population: 411,600 in 1978
Low: 525,000
barrels
Brought to you by Mark Edwards from Nothrim Bank
This year’s projected deficit is huge.
$5.9
billion
FY15 unrestricted
general fund
spending
$3.4
Projected
deficit
billion
(57% of
spending)
$2.6
billion
Projected
revenues
$8,000
per
Alaskan
$4,500
per
Alaskan
$3,500
per
Alaskan
We pay much lower state taxes than residents of any other
state. But we would have to pay much higher taxes to close
our deficit of $4500 per Alaskan.
Alaska
The 1980’s and Now
Similarities
Differences-Good
• Oil prices fall
• Oil revenues fall
• Economy remains very
dependent on oil
• Not preceded by economic
and population boom
• Problem is not a surprise
• Have savings this time
• Have more control this time
• More economic diversity, a
larger service sector, Native
Corps.
• Much lower interest rates
• Tax Reform Act of 1986?
Differences-Bad
• Much less oil production
• Falling federal funds and
military?
Still not sure if better, worse or just different? Too early to tell.
1980
A
G
E
Median
age=26,
3%>65
Median
age=34,
10%>65
AGE
2014
Baby
Boomers
Millennial
s
Gen Z?
iGen?
Women
Men
Housing Bubble?
10,000
Residential building permits,
9,000
8,000
7,000
6,000
5,000
Permit valuation went form $154 million in 1980 to $1 billion
in 1983 ($2.2 billion in todays dollars. 2014 valuation was
$674 million.
4,000
3,000
2,000
1,000
0
1974 1977 1980
1985
1990
1995
2000
2005
2010 2014
Source: Municipality of Anchorage
Alaska’s Population Gains Grew With
National Recession--But Now Slowing
Alaska’s total 2014 population count was 735,601
Total annual population gains and losses for Alaska
16,037
11,010
9,003 8,373
7,493 7,437
5,586
6,649
4,471
-61
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Alaska’s Migration Tells A Different
Story
Annual ne t migration, Alaska
8,664
3,009
1,131 1,113
292
-56
-2,023
-1,111
-2,870
-7,488
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Alaska Churn--The Number Of Folks Moving
In And Moving Out Of AK Each Year
Alaska migration
60,000
50,000
40,000
30,000
20,000
10,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Comers
Goers
Sourc e: Alas k a D epartment of Labor and W ork forc e D ev elopment, R es earc h and Analy s is Sec tion, Alas k a H ous ing Financ e C orporation, MLS.
We Remain Solidly AKers When It
Comes To Our Pickups
Number of registered pickups in Alaska
240,000
220,000
727 landing draws crowd
200,000
180,000
160,000
140,000
120,000
100,000
0 01 02 03 04 05 06 07 08 09 10 11 12 13 14
0
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20
49,530 snow machines, peaked at 55,249 in 2008
An Economic Comeback Kid --Toying
with Gold Rush Peak
1,200
Gold production in thousands of troy ounces, 1900 to 2014
1,000
800
600
400
200
0
1900
1910
1920
1930
1940
1950
1960
1970
1980
1990
2000
2014
Source: Alaska Department of Natural Resources, Division of Geological and Geophysical Surveys
Currently Our Largest Challenge-And It Is
Huge
Alaska's oil productiion daily production-m illions of barrels
2
1.5
1
0.5
0
1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Source: Alaska Department of Labor and Workforce Development, Research and Analysis Section; Alaska Department
of Revenue, Tax Division
2015
Tuesday, January 27, 2015
Forecasting the future But Laurence C. Smith warms right to
it in “The World in 2050: Four
Forces Shaping Civilization’s
Northern Future” (Plume, 2010).
He’s a professor of earth, planetary,
and space sciences at UCLA, and used
model projections and data to form his
main thesis: Countries north of the
equator will grow ever more powerful,
while countries to the south will vie for
survival. Indeed, boomtowns will
pop up in Alaska, Canada,
Greenland, Russia and
Scandinavia. As the permafrost melts,
we’ll build roads, bringing construction
jobs and a real estate rush.
AK’s and Nation's Unemployment Rate
Relationship Returning to “Normal”
Unemployment rate
12%
11%
10%
9%
8%
Alaska
7%
6%
5%
4%
3%
2%
1%
0%
2006 2007 2008 2009
U.S.
Alaska
2010
2011
U.S.
2012
2013 2014
2015
“Work is about a search for daily meaning as well as daily bread.” Studs Terkel
Alaska Now Enjoys The Nation’s Lowest
State and Local Tax Burden
Ranking
State
Ranking 1978
(before oil)
50th
Alaska
3rd
49th
New Hampshire
48th
Tennessee
47th
Delaware
46th
Alabama
Source:Tax Foundation
Health Care Just Keeps Marching On
AK He alth care e mployme nt
28,700 29,000 29,400
27,900
27,000
30,400
31,800
33,200
25,300
21,800
23,200
19,900
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: Alaska Department of Labor and Workforce Development, Research and Analysis. Includes private and public sector employment..
Anchorage's Military Numbers-Good News! Maybe
14,000
Uniformed Military-Anchorage
12,000
10,000
8,000
6,000
Troop cuts at Joint Base
Elmendorf-Richardson on
hold
4,000
2,000
0
*rough forecst
300
At What Age Do People Move In And Out Of Alaska?
Net migration (people moving in minus people moving out)
200
Military,
other
work,etc.
100
0
-100
Retirement,etc.
-200
College exodus, etc.
-300
0
5
Age
10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90
In 2027-- Here Is How Many Of Us There
Might Be--By Age
Age
Population projections 2012-2027
0-19
20-29
33,600
-4,900
30-39
19,300
40-44
45-59
'+60
13,300
-25,000
70,600
Sources: AKDOWL, R&A and U.S. Census Bureau