From the Editor

Construction Spending to Reach $7.2 Billion in 2019

t’s being widely reported that 2019 will be the year Alaska emerges from several years of hard economic times with more job opportunities as well as increases in private and public sector spending contributing to a slow crawl out of the recession into what is being characterized as a “post-recession” period. So while Alaska’s economic spring might not have sprung quite yet, it looks like it’s just around the corner.

Forward momentum in the construction industry will contribute greatly to Alaska’s recovery; there’s an anticipated uptick in private and public sector spending to $7.2 billion (including earthquake-related spending), a 10 percent increase from last year, according to Alaska’s Construction Spending Forecast 2019 by Scott Goldsmith, professor emeritus of economics at the Institute of Social and Economic Research (ISER), prepared for the construction industry.

The primary contributor to the construction industry’s increased spending will be a direct result of surges in petroleum spending—forecast to increase 13 percent to $2.7 billion—and national defense spending, set to grow 13 percent to just under $1 billion, according to the report.

Kathryn Mackenzie

Kathryn Mackenzie
Managing Editor, Alaska Business

While Alaska’s economic spring might not have sprung quite yet, it looks like it’s just around the corner.

“The growth in petroleum spending is attributable to several factors including many recent large discoveries on the North Slope, technological advances driving down the cost of development, positive federal and state policies towards the industry, and a higher oil price,” the report says.

Meanwhile, the bulk of national defense spending in Alaska can be attributed to the missile defense installation at Clear Air Force Station and Fort Greely and buildups ahead of the arrival two F-35 squadrons (nearly fifty planes total) at Eielson Air Force Base in Fairbanks (to read more about this exciting project, check out page 32).

Goldsmith forecasts the mining industry will increase construction spending by 18 percent in 2019, primarily related to the fact that Northern Star Resources’ Pogo mine is expanding its operations; two new prospects under development at Teck Resources’ Red Dog Mine; and the expansion of Kinross Gold’s Fort Knox Mine to extend the life of the mine to 2030.

Construction is tied into any industrial project, making it one of the major financial contributors to Alaska’s economy. When Alaskans are actively planning, financing, and building new projects, that generally bodes well for employment figures and the overall health of the state. Whether through infrastructure improvements, giant oil and gas projects, or small business offices, the growth of the construction industry leads to the same end point: an increase in job availability, improved roads and towns, and more discretionary spending.

We are thrilled at the prospect of Alaska’s return to economic health. Considering the role the construction industry plays in that growth, we are especially pleased this month to feature our Building Alaska Special Section, and we will continue to keep tabs on these projects and all others we anticipate will come down the pike.