Alaska's brush with the recession has ended a 21-year growth spurt, but the 49th state's economy suffered only a glancing blow, Alaska's state economist told a Tacoma audience Monday.
Neal Fried said the economic woes that torpedoed the economy in most of the country were felt in Alaska, but the state’s oil and government-based economy insulated it from economic devastation.
He spoke to a luncheon meeting of the Tacoma Transportation Club.
New state forecasts show Alaska’s economy still is affected by the economic woes of the country this year, he said. But an oil price increase would put the state back on a positive track.
“I’m always hoping we’ll see $5 gas again,” he joked with the crowd of about 160 people.
Interest in the Alaska economy is always high in the Puget Sound area because of the close economic ties between Alaska and Washington.
Some 75 percent of the waterborne cargo to Alaska, for instance, passes through the Port of Tacoma. The 49th state’s most popular air carrier, Alaska Airlines, is based in SeaTac, and much of the North Slope oil production is refined in Western Washington .
Fried said the economy of Alaska most of the time moves out of sync with that of the rest of the country. While both Washington and the U.S. as a whole, for instance, depend on manufacturing for a large part of their economic activity, Alaska has very little such activity. And government in the form of military activities, national parks and fishing regulation is a bigger player in Alaska than in most of the U.S.
Alaska entered the recession late, in early 2009, while some states were feeling the effects of the downturn in 2008, he said.
And because of the stability of government and oil industry employment – more Alaskans are working on the North Slope now than when oil production peaked in 1988 – Alaska has seen a small drop in its employed work force, about 0.5 percent. That compares with 5 percent of the Washington work force and 6 percent nationwide.
On the negative side, cruise ship visits are down to Alaska this year, in part because of a $50 per-head tax on cruise passengers and because of overcapacity in the market. The state is reducing that tax hoping to attract more tourists to cruise to Alaska. A moratorium on offshore drilling could affect growth in oil employment, he said, but air cargo activity is increasing as the economy shows signs of reviving. Anchorage and Fairbanks are major refueling stops for air freight flights from Asia to North America and Europe.
The flow of immigrants from other states to Alaska could bolster the economy as job seekers relocate to a state rated by Business Week as the best place to start over, he said.