Individual community data helps provide overall snapshot of economic outlook for state
ANCHORAGE, Alaska (KTUU) - With the COVID-19 vaccine being made available to more and more Alaskans, economists have been projecting a possible improvement in the statewide economy as early as this year. That’s despite a very tough 2020, and a recent change in expectations for the upcoming tourism season.
“They use the term ‘black swan,’ which I’ve not always liked,” said Neal Fried, a State of Alaska economist, “but some major surprise that no one could’ve predicted. This is certainly it for Alaska.”
“All the rest of the recessions, some of them have been surprising,” he continued, “but this one came on so fast, and was so deep and so broad, that it puts it in a unique place. And it could be the recession where we lose more jobs than we’ve ever lost before.”
Alaska overall had what Fried called a “bad,” three-year recession in the past half-decade – a dip continuing throughout 2016, 2017, and 2018 – then saw some improvement in 2019, when the visitor industry saw record highs and oil was doing a bit better.
“We expected 2020 to be even better,” Fried said, “because we were going to have a stronger recovery in oil and another great year in visitors. But no, they both got hit really hard, so we basically had a four-year recession with one year in between COVID-19 that was turning slightly positive.”
As it turned out, 2020 proved to be a devastating year for the economy. Alaska lost about 27,000 jobs, according to a January Economic Trends report, a historic drop well beyond that of the exodus following the completion of the pipeline in the ’70s and the drop precipitated by the big oil bust in the 1980s. Yet even with the pandemic raging on, economists initially expected at least some tinge of statewide economic recovery sometime this year, with more hope arriving in the form of more vaccine availability.
“We think it will bounce back to some degree,” Fried said, “just depends how much. A lot of it depends on consumer confidence.”
Slight economic improvement had been projected for most of the state, but the picture is different community by community. Looking at job levels overall, for example, Anchorage lost about 9% last year, while Southwest Alaska lost about 4% and Southeast lost 15%. At the start of 2021, researchers said they expected a jobs increase of around 3% statewide, if projections – which can be tough to measure during any regular old year – proved accurate.
The year before, the only industry that appeared to go largely unaffected, according to Fried, was the federal government sector, leaving many questions about what might be next not only for the state but for individual communities and industries too. The Trends report showed 35% of 2020 losses as being in the leisure and hospitality sector and transport and utilities sinking by 13%, with drops in oil and gas, wholesale, retail, professional education, and others. Fairbanks, Anchorage, and Southeast all have separate forecasts within the same report.
“There’s a real variation around the state, but I don’t think any part of the state really escaped at least some effects,” Fried said, “and in most places, a lot of effects, as the worst recession a lot of parts of the state have ever experienced.
“You look at some communities,” he added. “Can you imagine Skagway, how they’re feeling? Denali Borough, where visitors are so important? All of Southeast? You know, they’re on pins and needles.”
The recent announcement of Canadian cruise ship restrictions, through, and elimination of many routes through Alaska has reduced expectations significantly. Fried said Thursday that recovery is still possible but will now be more difficult since only moderate growth was projected for 2021 in the first place.
“It’s going to take many, many years to claw back what we lost just this last year in 2020,” he said, “and additional years to claw back to where we were in 2015.”
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