Alaskanomic's Economic Update [Part 1] - P.O.W. Report

Wednesday, April 5, 2017

Alaskanomic's Economic Update [Part 1]

[From Alaskanomics Blog]

Posted: 04 Apr 2017 01:30 PM PDT
By: Mark Edwards – Senior Credit Officer & Bank Economist

Each year, Northrim Bank publishes the Alaska Economic Update. It is an opportunity to review the past year as well as look forward to the current year in regards to oil prices, jobs and housing. We will break the report into three sections for the blog. Once all have been posted, we will post the full report in our ‘Resources’ section for your convenience.

The performance of the Alaska economy in 2017 will be impacted by a number of key variables. There will be a short-term drag on the economy if the Alaska Legislature is able to create a sustainable budget by making difficult decisions on reduced spending levels, increased taxes and changes to the Permanent Fund. However, a balanced budget solution will have long-run positive impacts through a return of business confidence and a stabilized climate for private capital investment.

We are closely monitoring the potential changes in interest rates and inflation, which have remained low for nearly a decade. Potentially rising rates will impact a number of sectors, and could be most broadly felt in the housing market.

The change in federal administration in 2017 has the potential to positively impact the government regulation of natural resource development in Alaska and is likely to increase the levels of military and domestic infrastructure spending. The energy sector is starting to stabilize as the worst of falling oil prices and related cuts to employment and spending are likely behind us.

Improvements in the U.S. economy are expected to sustain the recent growth in Alaska tourism activity. The health care industry continues to expand. This sector has been the leading source of job growth in Alaska over the last decade. Medical related construction and building improvements have also helped the economy.

A decrease of 2.4% in payroll jobs statewide was the most negative economic indicator in 2016. A loss of 7,600 jobs in Alaska was driven by layoffs in the oil & gas industry, which impacted business and professional services, construction and state government. As a result, population showed virtually no growth last year. Gross State Product and personal income statistics reported modest declines of less than 1%.

Inflation - Inflation expectations are rising after years of limited change in overall prices. Anchorage is the only city in Alaska tracked by the Federal Bureau of Labor Statistics (BLS) for inflation. The BLS reported that the consumer price index for Anchorage rose 0.9% in 2016, compared to a decline of 0.1% in 2015. The major components contributing to an increase were Medical Care +4.8%, Housing +1.4%, and Apparel +1%. Year over year declines were measured in Energy -1.5%, Non-Durable Goods -1.1% and Food & Beverages -0.9%. Stable prices have helped maintain consumer purchasing power during this period of slower personal income growth.

Read More: Trooper Report Week of March 26, 2017

Any news or stories are always welcome!

Subscribe to posts via email:
Enter your email address:

Delivered by FeedBurner

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.