Legislative Success! Alaska Enters Recession


It's Official: the 2016 Alaska Recession

It’s Official: the 2016 Alaska Recession

WC can report that the Alaska Legislature has accomplished something: it has put the State of Alaska in an economic recession.

That’s right, it’s official. Moody’s Analytics, a well-regarded economics consulting services, reports:

The failure of energy prices to rebound has pushed Alaska into recession. Job growth is among the slowest in the nation, on par with that in other energy-dependent states such as North Dakota and West Virginia. Mining and energy-related firms have been steadily cutting workers over the past year, and lower state severance tax revenues are pressuring Alaska’s ailing public sector. Secondary industries such as business/profes- sional services that rely on energy are suffering as well. The jobless rate, at 6.4%, is more than 1 percentage point above the U.S. average even though the labor force is at a five-year low.

And, remember, the Alaska Legislature proposes to cut spending to solve the problem. Cutting state spending will necessarily mean more job losses, in sectors of the economy where the economic multipliers are much higher than oil and gas. So, thanks to our friends in the majority caucus of the state house and senate, we can all look forward to a deeper, more serious recession. Isn’t that special?

As the fools in the House and Senate burn through our cash reserves in the Constitutional Budget Reserve, they reduce the options for solving the crisis. Which means it will be that much harder to climb out of the fiscal hole those folks are digging for us.

This didn’t have to happen. WC isn’t the only person who cautioned that it would be very easy for the Alaska Legislature to take a fiscal crisis and make it an economic crisis. But now it is.

It’s not too late to mitigate things. The Legislature could start by adopting Governor Walker’s budget proposal, which strikes a pretty good balance and charts a pretty clear path. If the Republican Majority coalition in the state legislature rejects Governor Walker’s ideas because they came from an apostate, a Republican who ran as an independent against the incumbent Republican, they are placing their political bitterness ahead of both the state’s economic health and the will of the people. And that is utterly wrong.

Or the Legislature could remember the rule about getting out of holes: when you find yourself in a deep hole, the first thing to do is to stop digging. The Legislature’s slash and burn tactics are just digging a deeper hole. Slash and burn the state economy a little more and you might put the state in a full scale depression. Won’t that be fun?

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4 thoughts on “Legislative Success! Alaska Enters Recession

  1. You’ve correctly identified some of the many who have brought us to this wholly manufactured ‘crisis’.

    The ruling majority Republicans in the legislature, (with an assist from some supposedly Democrats), many by means of intentional corruption and of others through willful malfeasance and not a small group via their own utter incompetence, have given an able assist to their corporate masters in the manufacturing of this ‘crisis’.

    What you’ve failed to do is address how to ‘fix’ the ‘crisis’.

    This ‘crisis’ exists because private and corporate interests, with the assistance of those in ‘leadership’ positions, have been very successful in their aim to line their pockets with income from public resources.

    Walker’s proposal is to transfer an even larger burden onto the backs of the public.

    Thus allowing those responsible to skate free once again.

    If your interests are aligned with the oligarchy, then yes, Walker’s plan is perfect. The oligarchs and their minions will embrace your delusion.

    Of course, if you’re just a member of the public, your own interests won’t be served, but why would that be any consideration in terms of public policy? Why, indeed.

    Why would that be of any consideration if you’re proposing the public go along with bailing out the people who manufactured this ‘crisis’?

    • For the foreseeable future, and quite possibly forever, oil is done. A state economy based on oil is doomed. If and when oil prices recover to the point that it is cost effective to develop new fields on the North Slope and expand throughput, oil may no longer be the fuel of choice. And oil prices may never reach the levels where existing throughput supports the state.

      We can moan about the waste that came before, but that doesn’t help us now. suck it up; it’s time we paid for what we get.

      /WC

  2. I continue to be amazed at the number of politicians holding public office who have no basic economics knowledge and by those who vote for them. You cannot run a government like a household. After the Alaskan economy began to decline, I began to follow the situation and noted that when Gov. Walker made any mention of increasing taxes just a little, state lawmakers began to showboat and speak against the idea. They know it takes revenue to run a state, but they have theirs and couldn’t really care less about the welfare of the state or its citizens. What should have happened in Alaska a long time ago was that there should have been an effort to diversify the economy instead of thinking that the state would always be flush from oil revenue. Now that the price of oil has decreased, these lawmakers and others in oil producing states remain in denial and refuse to raise taxes by even 1%. As you mentioned in this post, WC, cutting pending in a recession is sure to make the economy worse. Those of us who have studied economics know this.

  3. TIme to suck it up and pay for what we get? Carrying their water much?

    In what world do you think these oligarchs will allow our interests to be placed in front of theirs?

    It’s not time for us to suck it up and give them more, it’s time to tell them they can’t have their free ride on our backs, not for one minute more.

    It’s time they paid their own way.

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