The typical definition of a recession is two or more consecutive quarters in which the gross domestic product (GDP) of the economy declines. By that definition, Alaska’s most recent recession started in June 2014, although the significant decline didn’t occur until 6 months later.
Alaska posted GDP losses in 6 out of 7 quarters between Q2 2014 and Q1 2016, before starting a gradual recovery. By this definition, the recession ended in mid-2016 and we are currently in a recovery period.
GDP Isn’t a Good Measure in Alaska
However, using GDP is a little misleading in a resource based economy. Since GDP is the market value of the goods that are produced inside the economic system, the value of the oil counts toward Alaska’s GDP. So, even if the same amount of oil is produced (and the same number of workers producing it), when the price of oil falls the State GDP falls with it. But, those losses likely fall more on corporate balance sheets than on Alaskans’ paychecks.
The price of oil fell from $100.47 on August 29th, 2014 to $26.23 on January 20th, 2016. As a result, the value of the oil that was produced in 2015 was nearly $9 billion less than 2014. That reduction in oil value accounted for all of the losses in GDP, and erased all the gains made elsewhere in the economy.
Since the oil price started climbing again last year, the State GDP has grown with it. But does that really mean the economy was getting stronger?
I’m going to skip the discussion on the unemployment rate for today. There’s a lot of interesting information buried in that statistic, but I’ll save that conversation for another day.
But, job gains/losses do appear to be a good indicator of how Alaska’s economy is doing. Let’s look at those numbers:
From this dataset, you can clearly see that job losses were occurring from February 2015 to January of 2018 (with a few months of small increases inside that range). In total, Alaska lost just under 5,000 jobs during that period, which is roughly 1.4% of all jobs in Alaska. Most of these losses came from the oil industry and the state government, while the rest of the economy remained remarkably stable.
But look at the end of that graph. See the spike in March 2018? That increase of 271 jobs is the largest monthly increase since late 2011. And it doesn’t appear to be part of a cyclical pre-summer hiring process either. We need more data to corroborate it, but this might be a leading indicator that Alaska’s economy is on the mend.