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Research Matters No. 88. Alaska's 2015 Construction Spending Forecast



Published:

January 30, 2015

Construction spending in Alaska will be an estimated $8.5 billion in 2015, down about 3% from spending in 2014. About $5.5 billion of that total will be private spending and $3 billion government spending. That's according to the new construction spending forecast, by Scott Goldsmith and Pamela Cravez of ISER. That forecast is done annually for the Construction Industry Progress Fund and the Associated General Contractors of Alaska, with funding from Northrim Bank. The authors find:

  • Overall construction spending is expected to remain strong in 2015, despite the recent steep drop in oil prices. There is still a backlog of projects funded under large state capital budgets in earlier years, and much of the federal spending for transportation and other projects is not sensitive to the price of oil. But low oil prices have created a big state budget deficit, and it is possible the state will consider cancelling some of the currently planned projects.

 

  • Forecasting how much oil and gas companies will spend for capital projects in Alaska is especially difficult this year. The companies had earlier announced plans to increase spending 18%. But the low oil price will likely force some cutbacks, so spending is forecast to stay about the same as last year. The petroleum industry tends to make investment decisions based on anticipated long-run prices, but the longer prices stay low the more likely companies are to re-evaluate planned projects.

 

  • Private spending for commercial and residential construction is likely to be down in 2015, in the face of slowing job and population growth and uncertainty about oil prices.

 

  • National-defense spending is expected to be up in 2015, with modest increases in spending for military facilities and environmental clean-up programs, as well as the first of planned major spending for expansion of the missile defense system at Fort Greely.

 

Read the entire forecast, Alaska's 2015 Construction Spending Forecast (pdf, 1.8MB), by Scott Goldsmith and Pamela Cravez.

 

ISER publications are solely the work of individual authors and should be attributed to them, not to ISER, the University of Alaska Anchorage, or the research sponsors.

 

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