Alaska is expected produce about $35 billion worth of goods and services in 2005 and add some 6,200 new jobs across the state, according to Pat Burden1, president of Anchorage-based Northern Economics Inc.
Alaska's gross state product, the dollar value of the goods and services produced in the state, will likely decline by about $1 billion from last year, Burden told attendees of the World Trade Center Alaska's statewide economic forecast luncheon in Anchorage on Jan. 13.
Though Alaska's gross state product, or GSP, is expected to decline by about 3 percent this year, it is still $4 billion more than the GSP in 2003. Over the long-term, the value of goods and services produced in Alaska is still on an upward trend, Burden said.
Burden attributed a sharp 16 percent increase in last year's GSP over that of 2003 to unpredictably high oil prices. In 2005, oil prices are expected to be lower than last year but still be high relative to the historic average, he said.
Some of 2004's added GSP of $5 billion - an increase from $31 billion in 2003 to $36 billion in 2004 - went to the state's general fund and the Alaska Permanent Fund, with much of it going out of state to the oil companies' corporate headquarters, according to Burden.
The GSP essentially measures the amount of wealth Alaska-domiciled businesses and residents create by taking into account wages, proprietary income, interest, dividends, rent and royalties, Burden said in a later phone interview.
"GSP is what is generated in Alaska, but it does not necessarily stay here," he said.
The oil and gas industry will likely account for the largest share of the GSP in 2005 at about $8.8 billion, with finance and other services coming in second at $7.6 billion. Work related to finance, insurance and real estate is included in the finance and other services category along with that of the self-employed and most Alaska Native regional corporations.
Burden forecasted that the government sector's share of the 2005 GSP will be $6.8 billion in 2005, up $300 million from last year.
The Alaska Department of Labor and Workforce development forecasted the state will gain 4,100 new jobs this year, excluding any gains in the number of uniformed military and self-employed working in Alaska. By taking into account military personnel and the self-employed along with wage and salary workers in Alaska, Burden estimated that the state will gain 6,200 new jobs in 2005.
The military's expansion in Alaska is expected to account for at least 50 percent of the government sector's 1,900 new jobs in the state this year. Budget increases in education and local government will also add new jobs, Burden said.
The greatest number of new jobs will likely come from the state's health and education sector, with an expected 6 percent gain in employment, or some 2,800 new jobs, to 49,000 workers. Burden said many of these new jobs will come from expansion of health care facilities in rural Alaska and the Alaska Native health system as well as the new hospital under construction in the Matanuska-Susitna Borough.
