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Alaska construction spending expected to drop by 10 percent in 2017

  • Author: Annie Zak
  • Updated: January 26, 2017
  • Published January 26, 2017

After taking a hit last year, construction spending in Alaska is expected to decline again in 2017.

The Associated General Contractors of Alaska predicts the total value of "on the street" construction spending this year will be nearly $6.5 billion, down about 10 percent from last year. That's according to AGC's annual construction spending forecast, released Thursday.

Oil and gas construction spending is expected to drop 15 percent, to $2.4 billion, compared with 2016. Private spending excluding the oil and gas sector, however, is projected to increase 2 percent from last year to about $1.6 billion. Public spending is expected to drop 12 percent, the report said.

Last year, AGC predicted construction spending would fall 18 percent to $7.3 billion. That figure ended up being even lower at $7.1 billion for 2016, AGC said Thursday.

"On the street" spending measures activity that's anticipated to happen this year. That's distinct from a measure of new contracts, which often span multiple years, the forecast said.

In the private sector, residential construction spending is expected to see the biggest projected drop, at 21 percent. Health care sector spending is expected to surge 55 percent.

Construction spending on national defense in Alaska is expected to be 15 percent higher this year, thanks to projects at Eielson Air Force Base near Fairbanks, Fort Greely and Clear Air Force Station, the AGC said.

Scott Goldsmith, a professor emeritus of economics at the University of Alaska Anchorage's Institute of Social and Economic Research, was one of the authors of the report.

"I think everybody recognizes there are two big problems," he said of expected declines in commercial building, at an event Thursday where the forecast was released. "One is the softness of the overall economy and the second is not knowing what in the world is going to come out of Juneau this year. Whether we're going to have a solution to our fiscal problems and what that solution will look like, or if we're going to kick the can down the road yet again."

Following a series of slides at the forecast event Thursday, a picture of President Donald Trump's face — accompanied by a long string of question marks — appeared on the projector screen.

"The big uncertainty," Goldsmith said, "is new federal policies" and how they will affect infrastructure spending.

Alaska's construction industry is also expected to lose 1,200 jobs this year, according to projections from the Alaska Department of Labor and Workforce Development.

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