By: Mark Edwards – Senior Credit Officer & Bank Economist
We conclude our Alaska Economic Update today with a look at Gross Domestic Product, Income, Population and Employment.
Gross Domestic Product, GDP – U.S. GDP growth has been stagnate and below historical levels for the last decade. Real GDP grew 1.6% nationwide in 2016 according to the U.S. Department of Commerce - Bureau of Economic Analysis. Economic activity was driven by growth in personal expenditures, residential fixed investment, government spending, and exports. This was partially offset by lower levels of commercial inventory and fixed investment and an increase in imports. Optimism for future economic growth stems from potential tax cuts, deregulation, encouraging the repatriation of dollars to the U.S. for capital expenditures, and proposed increases in spending on domestic infrastructure.
Alaska’s gross state product (GSP) is only available through the third quarter of 2016. The market value of all goods and services produced in Alaksa was measured at $51.5 billion. Alaska GSP declined 0.1% in 3Q ranking it 49 out of 50 states. New Mexico was the only other state not to grow in any quarter of 2016. Alaska’s GSP declined 0.6% in 2015.
Per capita income – Alaska’s per capita income in the third quarter of 2016 was $55,588. This ranked 8th best out of the 50 U.S. states. U.S. per capita income was $49,681. Compared to the third quarter of 2015, Alaska declined 0.7%. Total income in Alaska was $41.1 billion, down $331 million from the prior year. Oil & gas, military and professional services were the sectors with the largest declines. Health care and federal government showed the best improvement. In contrast, U.S. personal income rose 3.4% year over year in 3Q 2016.
Population – Alaska’s population has remained virtually unchanged for the last three years. The most recent Department of Labor estimate for Alaska's population is 739,828. That is an increase of only 3,969 people in the last three years. The natural increase of births minus deaths was 21,450 since 2014. However, a net of in and out migration of residents resulted in a loss of 17,481 people over the same period.
Employment – Alaska finished the year with a seasonally adjusted unemployment rate of 6.7% according to the State Department of Labor. Preliminary data estimates a loss of 7,600 jobs or 2.4% when compared to the end of 2015. Approximately 3,100 of those jobs were lost in Anchorage and 2,800 in the Northern region, principally due to Oil & Gas. The Interior region saw a reduction of 700 jobs and Southeast had 600 fewer positions at year end.
By sector, Oil & Gas was hit the hardest, shrinking 23.5% or 3,100 jobs. Construction declined by 8% or 1,200 jobs. Professional and Business Services lost 4.6% or 1,300 jobs. Total government jobs were down 1.6% or 1,300 resulting from a decline in State government positions. Federal employment increased by 100. Health care was again the leading growth sector, adding 900 jobs or 2.6%.
The graph illustrates the more volatile swing of U.S. unemployment rates in red over the last 20 years. U.S. rates were as low as 3.9% and as high as 9.9%. Whereas, Alaska stayed within a much tighter band in blue, reaching a low of 6.3% and a high of 7.9%.
Written by Mark Edwards, SVP Senior Credit Officer and Bank Economist with Northrim Bank. He was an adjunct professor of economics at Alaska Pacific University. Market served the State of Alaska as an Economist in the Department of Commerce and the Department of Revenue, and as the Director of the Office of Economic Development. He has a B.A. in Economics from the University of Virginia and a Master’s Degree in International Business from the Thunderbird School of Global Management.