Alaskanomics

Anchorage is the 23rd Most Expensive City in the US

Last week, the Anchorage Economic Development Council (AEDC) released its first Cost of Living Report for Anchorage.  The report is based on the findings from the national Cost of Living Index (COLI) survey, which was developed by the Council for Community and Economic Research. Each participant's index is a percentage of the average for all prices. The index does not measure that change of prices over time, but rather the relative cost of living compared to the national average. The survey measures prices of goods and services in 306 cities throughout all 50 states. There are six categories for the survey: housing, health care, miscellaneous goods and services, grocery, transportation and utilities. In 2013, Anchorage ranked as the 23^rd most expensive city in the US. The cost of living in Anchorage was 126.2 percent of the national average.

2013 was the 2^nd lowest reading on the past five years for Anchorage. There was a 3.4 point decrease from 2012 in the overall composite, and four of the six indices decreased in 2013. The two that rose shouldn’t be a big surprise to anyone, housing and healthcare. Anchorage ranks fourth in the nation for the cost of healthcare. The only three cities in the nation with higher costs are Fairbanks, Juneau and Kodiak.  Illustrating, Alaska has the highest healthcare costs in the US. The cost for housing in Anchorage kept rising as well. Anchorage ranks 20^th in the nation in relation to the cost of housing. We are ahead of Chicago, Portland, Seattle and Philadelphia in housing costs. As we have noted in previous posts, it is alarming that Anchorage has a higher cost of housing than large, densely populated areas. The average sales price for a home in Anchorage in 2013 was nearly $347,000, up 2.9 percent from 2012 and 7.8 higher than 2011.

The four other factors decreased between 2012 and 2013, and the only index that was below the national average was utilities. The average cost of utilities sat just below the national average at 99. Even though Anchorage’s cost for natural gas was 126.4 percent of the national average, electrical was only 77 percent of the average. Grocery saw a large decrease, going from 129.1 to 113 between 2012 and 2013. In a recent Anchorage Daily News Article, AEDC CEO Bill Popp, noted that he felt the decrease was due competition in the grocery business. Several new Wal-Mart superstores, Sam’s Club and the remodel and expansion of existing groceries have resulted in more local competition and reduced the cost of groceries for Anchorage residents.

Popp feels that it is possible to lower Anchorage’s cost of living by encouraging new businesses to come to Alaska and aggressively growing existing businesses. This will lead to more competition and will lower prices for many goods and services. He is also careful to note that it will take the efforts of not only policy makers, but the entire community. If the city decides to make the cost of living a priority, solutions to the rising costs can be found and implemented for Anchorage.

To read the full report, visit http://aedcweb.com/phocadownload/2013%20coli%20report%20final.pdf

Anchorage Chamber Lunch with Senator Lisa Murkowski

(Photo Credit: Anchorage Chamber of Commerce)

Today, the Anchorage Chamber hosted US Senator Lisa Murkowski at its weekly, Monday Forum. The Senator shared that there was a large number of high ranking visitors that we have seen in the state this month and how the visits were important to the political climate. In August, the Chief of the US Forest Service, Administrator of the EPA, the acting Under Secretary of Commerce for NOAA, the Air Force Chief of Staff, the Commandant of the Coast Guard  and the Secretary of the Interior have all visited, or will visit, Alaska and learned how their respective agencies work within the Alaskan environment.

Senator Murkowski continued by discussing the importance of the military in regards to Alaska’s economy. Alaska has strategic military value and the Pentagon is beginning to realize the potential across the state.

The Senator spoke in depth about economic concerns and the Affordable Care Act (ACA) and how each affected the State of Alaska and its residents. She noted that even though we don’t know a specific date, we will bump up against the debt ceiling in the coming months. The Senator feels it is important to figure out a solution to the problem before it is too late and feels that Congress can do a better job of finding ways to fix the current budget. She stated that the sequestration does not provide solutions to the problem of the $16.9 trillion debt that the US currently holds.

The final subject that the Senator addressed before taking questions from the audience was the Affordable Care Act (ACA). Senator Murkowski agreed that the US needed healthcare reform but did not feel that the ACA addressed the true problems of needing increased access and decreasing the cost of healthcare. She believed that defunding the act was not the solution because it would leave the law on the books and would burden individuals and families. Senator Murkowski agreed that there were good parts to the new law, including the provision to allow dependents to remain on a parent’s plan until age 26, as well as the changes to insurers being able to limit coverage to individuals with pre-existing conditions. She stated that change will come when there is a reduction in cost of healthcare to individuals and families.

Senator Murkowski wrapped up her presentation with a note that she felt that it was time for the Congress to start governing. Too much time was being spent on messaging and working to secure votes for the next election. She wanted Congress to lead the way and start to create laws that would make a difference, rather than blaming the other side for the Nation’s problems.

Senator Murkowski is the first Alaskan born senator and the 6^th to represent Alaska in Congress. She was re-elected in 2010 and holds a number of committee positions, including being a ranking member of the Committee on Energy and Natural Resources.

Alaska's payroll job count increased by 5,300 in 2012, a 1.6% improvement over 2011

The total number of payroll jobs, not including uniformed military and the self-employed, is about 335,000.  It is important to note this is a preliminary estimate by the Alaska Department of Labor using nine months of actual data from employer tax returns and three months of estimates.  The final numbers will be revised in March of 2013.

2012 saw the largest improvements from Health Care (+4.8%), Professional and Business Services (+4.8%), and Oil and Gas Extraction (+4.6%). The biggest surprise came from the Construction sector, which had a 4.4% increase after declining for the last six years.  This is attributed to an enormous $3.4 billion State capital budget, an additional $454 million in voter approved bond packages, continued investment in older oil fields, and an uptick in residential housing construction.  This was somewhat tempered by a reduction in Federal spending on the military and through the Army Corps of Engineers.

Health Care is benefiting from a demographic situation where Alaska has both an aging baby boomer population and a young, under 20 generation.  People require the most health care at the beginning and end of their lives.

The largest declining sectors in the Labor Department figures were Federal Government (-4.1%) which lost 700 jobs.  Financial Activities decreased by 2% or 300 jobs and Information Services fell 1.6% or 100 jobs.

The State Labor Department is forecasting 4,200 new jobs or 1.2% growth in 2013.  They predict a continued job loss of 300 Federal positions, which will be more than offset by a gain of 600 total government jobs at the state and local level.  Other than a 1% contraction in Financial Activities jobs, they foresee growth in every other sector of the economy in 2013.  Health Care, Oil and Gas and Professional Services are again expected to lead the expansion of job opportunities in Alaska.

The complete report can be read in January issue of Alaska Economic Trends at: http://labor.state.ak.us/trends/home.htm

Alaska Department of Labor projects 13,000 new health care jobs by 2020; one-third of all new jobs in the state

In the October issue of Alaska Trends, the Alaska Department of Labor forecasts job growth in Alaska's industries from 2010 to 2020. Health care and social assistance jobs lead the forecast, with 13,000 new jobs in the coming decade. This is one-third of all new jobs that will be created, growing health care jobs from about 13% of Alaska's jobs in 2010 to 15% in 2020.

The department forecasts total job growth in Alaska of 38,749 jobs, or 12%, from 2010 to 2020. These numbers exclude self-employed workers, fishermen and domestic workers.

Forecasts for the next five industries with the largest growth in absolute jobs include:

• Retail trade - 4,038 jobs
• Educational services, public and private (includes local and state government education employees) - 3,582
• Accommodation and food services - 3,395
• Financial activities, including real estate - 1,966
• Professional, scientific & technical - 1,915

The complete forecast is available here.

Anchorage Inflation Rises 3.6% in 2011

According to the Federal Bureau of Labor Statistics, the Consumer Price Index (CPI) in Anchorage rose 3.6% in 2011.  By comparision, the change for the entire U.S. was 3% for the year.  Anchorage is the only "urban" community in Alaska that is tracked for these national statistics due to its population. 

Anchorage's 10-year average inflation rate has been 2.7% per year.  Average prices have not shown much volitility during the decade reaching a high of 4.6% in 2008 and a low of 1.2% in 2009.  The slightly higher than average inflation in 2011 can mostly be attributed to higher energy prices. 

Energy prices in 2011 were 10.1% higher than the previous year.  Gasoline prices were 14.8% higher and electricity climbed 9.6%.  Food also increased 4.8% in 2011.  After removing these two highly volitile categories, the remainder of the index rose 2.6% over the last 12 months.

The other categories with the largest price increases were seen in Apparel (6.7%), Medical Care (5.8%), Transportation (5.3%), and Housing (2.9%). The price of Recreation showed no change and a decline was measured in Education and Communications (down 0.7%).

Nationwide, inflation has also been most impacted by rising energy costs, up 6.6% in 2011.  Food prices rose 4.7% on average and the U.S. Medical costs rose 3%.  However, housing costs climbed only 1.3% across the county compared to 2.9% in Anchorage.  Housing accounts for the largest share of personal monthly expenses.

Alaska's total state personal income unchanged in 3rd Quarter; U.S. up slightly

Total personal income for Alaska was $32.6 billion in the third quarter of 2011, according to data released by the U.S. Department of Commerce Bureau of Economic Analysis. The U.S. grew 0.1%. Growth rates ranged from -0.4 percent in West Virginia to 0.6 percent in Washington State. Personal income fell or was unchanged in 20 states and grew 0.2 percent in the other thirty states.

In Alaska, decreases in government transfer payments were matched by increases in net earnings, dividends, interest and rent.

The largest percentage increases in wages and salaries were in the following industries:

• Administrative and waste services up 3.2%
• Professional, scientific and technical services up 2.2%
• Health care and social assistance up 1.4%

The largest declines in wages and salaries were in the following industries:

• Information down 2.6%
• Construction down 2.2%
• Mining (including petroleum) down 2.0%

 

 

Fread Sees 0.6% Job Growth for Anchorage in 2012; Health Care and Hospitality will Lead Gains

In a January presentation to the Building Owners and Managers Association in Anchorage, Alaska Department of Labor's veteran researcher, Neal Fried, revealed his forecast for job growth in Anchorage for 2012.

Preiminary figures for 2011 indicate that Anchorage jobs grew 1.4%, after job losses in 2009 and nearly flat job numbers in 2010. Fried's forecasts "modest" growth for 2012 at 0.6%:

• Government and Construction sectors will lose 400 and 300 jobs, respectively
• Health Care sector will gain 700 jobs
• Leisure and Hospitality will gain 400 jobs
• Transportation will gain 300 jobs
• Retail Trade and Professional Services will each gain 200 jobs

Health Care is Alaska's Fastest-Growing Industry: Represents 9% of State's Jobs

The August issue of Alaska Economic Trends, released by the State of Alaska Department of Labor, features Alaska's health care industry. The industry added 10,000 jobs between 2001 and 2010, making it Alaska's fastest-growing industry. In 2010, the health care payroll was about $1.5 billion, with nearly 32,000 jobs. The actual job number is higher because it does not include self-employed health care professionals (for example, physicians who own their own practices), health care workers in non-health related government agencies (for example, school nurses), or military health care workers.

The U.S. Census Bureau estimates that 81% of Alaskans have health insurance, but that does not include about 21,000 Alaska Natives who are covered through the Alaska Tribal Health System. Alaska had the fifth-highest per capita health care costs in the nation in 2004, which is the latest available government data.

For more information about Alaska's health care industry, read the full report.

Alaska's "Top 100" Companies Employ One-Third of Alaska Workers; $4.3 billion in wages

The Alaska Department of Labor reported on the Top 100 Private Employers in the July issue of Alaska Economic Trends.These ten companies employ one-third of Alaska workers and have a combined payroll of $4.3 billion.

The list has changed quite a bit since 1985, when ARCO, BP and Alyeska Pipeline were in the Top 10, along with Alascom, two banks, two grocery chains, and two health care organizations. Providence, which was on the Top 10 list in 1985, has been in the number one spot for the past ten years.  

Alaska is the Most Productive State in 2010

Alaska led the nation in 2010 with the highest per capita real gross domestic product (GDP).  At $63,424 per person in value added economic output Alaska was 49% above the national average.  Mississippi rated the lowest at $29,345 or 31% below the national average.

Though Alaska’s output was impressive on a per capita basis, the size of our total GDP was $49 billion, which accounted for only 0.3% of the entire $14.6 trillion U.S. economy.

The Federal Bureau of Economic Analysis considers this report the most comprehensive measure of U.S. economic activity.  It calculates the total of what consumers, businesses and the government spends on final goods and services, plus investment and net foreign trade.  For example, it counts the wages earned by workers, the income generated by businesses and the sales, property and excise taxes paid.

Alaska’s real GDP grew by 1.9% in 2010 following and impressive 8.9% gain in 2009 in the midst of a national recession.  By comparision, the U.S. GDP increased 2.6% in 2010 after declining 2.5% in 2009.  In 2009 Alaska was the third fastest growing state economically and one of only 10 to increase. 

In 2010 the recovery was widespread, with 48 out of the 50 states showing improvement.  North Dakota was the fastest growing with a 7.1% gain due to a very active energy sector.  Second was New York, improving 5.1% mainly from a rebound in finance and insurance, which also helped Connecticut.  Nationally, durable goods manufacturing was the source of the largest overall improvements for the U.S. economy.  Retail trade also was a positve driver in 2010.  However, construction activity declined for the sixth straight year and affected Nevada the most.

In Alaska, the 1.9% growth in GDP was led by government spending, followed closely in improtance by mining (which includes oil & gas).  The third largest positive driver was health care, follwed by real estate.  Unlike the rest of the nation, construction activity was positive in Alaska.  The only significant decline in Alaska was the transportation and warehousing sector.

It is important to note that these national figures do include government spending.  Federal deficit spending has been over a $1 trillion dollars a year, meaning much of this “stimulus” spending is not sustainable over the long run and will need to decrease in future years.  Private sector economic growth will have to make up for this short-term government excess spending if GDP figures are going to continue to rise in the future.

The complete report can be read at: http://www.bea.gov/newsreleases/regional/gdp_state/2011/pdf/gsp0611.pdf