What constitutes a recession? Alaska's labor department proposes a way to measure it

It's still not clear if Alaska is in a recession, but the state's labor department has come up with a uniform way to determine whether it is.

In a new report released this week, the Alaska Department of Labor and Workforce Development proposes the definition of "recession" to be at least three consecutive quarters of year-over-year job losses. That way, the time period in question would always include either the first quarter or fourth quarter of each year, the report said -- when the state's seasonal industries are at their lowest employment.

Over the past year, the word "recession" has entered into discussions about the status of the Alaska economy, amid falling oil prices and a $3.8 billion state budget deficit.

But defining the term isn't always clear-cut. While there is a general consensus of what constitutes a recession at the national level -- using economic indicators such as gross domestic product, employment, unemployment and others -- it's much more murky for individual states, the report said, partly because state-level data is usually not as up-to-date or reliable.

"When people ask, 'are you in a recession?' we have to ask, well, what do you mean?" said Dan Robinson, the department's director of research and analysis, who authored the report. "Everyone has a general sense of what a recession is. … We think (this definition) makes the most sense, partly because it's simple."

This isn't a formal proposal that would need to be approved by some agency, but rather the department is suggesting a measurement of the economy that could be commonly accepted as a standard indicator of a recession.

Based on the data the labor department has right now, it's still "too early to tell" if the state is in a recession per this proposed definition, the report said. As of the third quarter of 2015, the state was still adding jobs. That means the soonest a recession could have started is the fourth quarter of last year.


"Preliminary job numbers suggest growth nearly dried up in the fourth quarter. ... Whether the expected recession is eventually determined to have begun in the fourth quarter of 2015 or the first quarter of 2016," the report said, "the writing is on the wall in the form of low oil prices, declining oil production, and a large state government budget gap."

By this same measure, the department said, the state has had three recessions since 1970: Between 1976 and 1978; 1986 and 1988; and the second quarter of 2009 to the fourth quarter of 2009. Notably, that's half as many recessions as the national economy experienced over the same time period.

The report focused on job loss as the main indicator of recession, not the state's gross domestic product or unemployment. The department said unemployment numbers can be misleading as an indicator of a recession because in Alaska "the migration of job seekers to and from the state complicates matters."

For 2014, Alaska ranked 50th for growth of gross domestic product by state, at -1.3 percent.

Annie Zak

Annie Zak was a business reporter for the ADN between 2015 and 2019.