Alaska out of recession but economists say recovery looks slow
The Alaska economy is officially out of a recession but the state’s economic recovery into 2020 looks mild, according to Alaska's leading economists.
The governor has been touting Alaska’s falling unemployment rate, private sector investment and growing economy on social media and before the Anchorage Chamber of Commerce.
On Monday, Gov. Michael Dunleavy spoke about investment in the oil patch and at Ted Stevens Anchorage International Airport and the state’s 6.1% unemployment rate.
“There’s a belief that as more people are hired on the Slope for winter work that it will go to 6% and if does that, we get to an unemployment rate we haven’t seen in the State of Alaska,” he said.
While the unemployment rate may be a record low for Alaska, Nolan Klouda, the executive director of the Center for Economic Development at the University of Alaska, points out, it remains the highest in the country.
And job growth has not been even across all Alaska sectors.
The most recent data
shows that jobs have been added in the oil and gas sector and construction but there have been losses in state government jobs.
Falling unemployment figures have another explanation, Alaskans have been leaving the state, shrinking the labor pool.
Dr. Mouhcine Guettabi, an associate professor at the Institute of Social and Economic Research, says the decline of the state’s labor force could be graphed during the recession as the economy in the Lower 48 did well.
Guettabi is predicting that Alaska’s economy will grow a modest 0.7% in 2020, adding roughly 2000 jobs. As he points out, growth at that rate would take several years to recover the nearly 11,500 jobs lost during the recent four-year recession.
The economic recovery is also not evenly spread across Alaska. Klouda says Anchorage is lagging behind the rest of the state and the city could still technically be in recession.
Neal Fried, an economist at the Department of Labor, agrees with Guettabi and Klouda that Alaska statewide is out of recession, having experienced 13 months of growth.
Barring a major shock, all three economists describe what’s next slightly differently.
Fried called Alaska’s economic recovery “mild,” Guettabi termed it as “fairly modest” and Klouda referred to future growth in Alaska as “fragile.”
“It doesn’t take too many negative events to send it the other way,” Klouda said.
A complicating factor will be upcoming budget debates and how the Alaska Legislature decides how to bridge the state’s $1.5 billion fiscal gap.
Klouda says new taxes could be a contracting factor, taking money out of circulation. Reducing the Permanent Fund dividend could also be contractionary as could reducing spending on state services.
“So, almost any of these [options] are going to cause some amount of economic pain, no matter what you do,” he said.