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Report: Alaska’s recession hasn’t significantly increased household debt

  • Author: Annie Zak
  • Updated: June 5, 2018
  • Published June 4, 2018

By several measures, Alaska's economic downturn hasn't substantially affected household debt in the state, according to a new report from the Alaska Department of Labor and Workforce Development.

Mortgage debt was mostly flat between 2012 and 2017 in Alaska. Auto loan debt went up in recent years, but the increase was similar to other states, the report found. Student loan debt here has grown, but that's also been a national trend.

"Despite that we're in a two-year recession, we're not seeing any of these indicators, at least, signal any kind of trouble," said Tiffany Wadel, an economist with the state's labor department and one of the authors on the article. "I was looking at this thinking I'd find something, like, 'Oh, it's two years in, we've got to be seeing something.' We're not."

Alaskans' household debt per capita was $57,850 in the fourth quarter of 2017, according to the report. That accounted for mortgages, auto loans, student loans, and credit cards, plus a smaller miscellaneous category that included things like personal loans.

The report uses data from the Federal Reserve Bank of New York. The data offer a snapshot of what the state's debt looks like, based on a random sample of credit report information from Equifax in the fourth quarter of 2017, the report said.

One area where Alaska stands out is in credit card debt. Since at least as far back as 2003, Alaska has had the highest per capita credit card debt of any state, the report found. In the fourth quarter of last year, that figure was $4,270.

"We weren't sure exactly what to make of that," said Dan Robinson, the labor department's chief of research and analysis and the other author on the article. "The fact that we're a little higher cost of living is part of it."

Another reason, Wadel suggested anecdotally, could be Alaskans' reliance on Alaska Airlines and its credit card. She added that credit card debt isn't significantly growing in Alaska.

Overall, the data didn't show any dramatic fluctuations in household debt — as opposed to business debt — that economists attributed to Alaska's current recession, which started around the end of 2015. Delinquency rates also haven't changed much recently.

"National factors, much more than anything state-specific, have driven most of the change over the last 15 years," the report said.

It's also important to note, Wadel said, that the data measure the debt per capita, divided among everyone who lives in the state, not just among people who actually carry that debt. That's why Alaska's per capita mortgage debt of $41,580 might seem low.

Relative stability in mortgage debt in Alaska recently reflects that, at least through last year, "the current downturn has had surprisingly little effect on the housing market," the report said.

Per capita auto debt in Alaska was $5,010 at the end of 2017, which was up 22 percent from 2011 when adjusted for inflation, the report found. That was "similar to increases in other states" during a time when such loans were extended to more borrowers.

Student loan debt per capita in Alaska shot up 69 percent from 2005 to $4,070 at the end of last year, the report found. In 2005, "student loan debt was less than half that of credit cards, but by 2017 they were nearly equal," according to the report.

"That can't continue indefinitely, just like mortgage debt can't continue indefinitely," Robinson said. Rising student loan debt is a trend across the country.

Alaska's income per capita of $56,042 was the tenth highest in the country last year, above the national figure of $50,392, according to the labor department. Alaska was on the higher end — tied with North Carolina at No. 16 — when measuring states' debt-to-income ratios, the report found.

"It seems like that suggests that our income certainly is in line, I'd say, with the amount of debt we carry," Wadel said.

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