ANCHORAGE, Alaska (AP) — Consumer confidence has fallen to a five-year low as Alaksa continues to struggle with a weak oil sector, budget cuts and a contentious legislative session.
The first quarter of 2016 is a low point for consumer optimism, which has fallen every quarter since the second half of 2014, The Alaska Dispatch News reported.
Oil prices began dropping in June 2014 and have not recovered.
According to a report by Anchorage consulting firm Northern Economics and Alaska Survey Research about 56 percent of Alaska residents say they think the state economy is getting worse and only 7 percent think it’s improving. About 43 percent think their local economy is weakening versus 8 percent who say economic prospects are good. Respondents had much more confidence in their own personal finances, with 55 percent saying they felt secure and 21 percent saying theirs were improving.
“People show the most concern about the thing over which they have the least control — the state economy,” said Jonathan King, vice president of Northern Economics. “There’s a lot of uncertainty. Are they planning for Armageddon or another $1,000 a year in taxes?”
Mouhcine Guettabi, assistant professor of economics at the University of Alaska Anchorage’s Institute for Social and Economic Research, said the survey doesn’t mean spending will necessarily change. He said responses depend on personal factors such as if the respondent works in the energy sector, and therefore is feeling worse about the economy, or if they are more removed.
“The survey tells you there is anxiety, but it doesn’t tell you necessarily about spending,” Guettabi said.
He said better metrics might include sales of homes, cars, boats and other high-price items that require longer-term financial stability to purchase.
He said he worries that so much talk about a recession and an economic downturn in Alaska may play a part in making the state’s economy work.
“The concern I’ve had is that there are sectors of the economy that are inevitably going to go through pain,” he said. “Some belt-tightening and cutbacks may happen that are not based on fundamentals.”