Slow, steady recovery continues for economy
Alaska’s economy is growing but the state has a long way to go to return to pre-recession levels.
The state’s has consistently had about 1,000 to 2,000 more jobs this year than in 2018. Preliminary Department of Labor employment figures for September show the state had 340,600 jobs, which is 1,900 more than a year prior.
Employment peaked in September 2015 at 351,100 jobs.
As the state is pulling out of a prolonged recession that started in late 2015, Alaska’s unemployment rate is as low as it’s ever been.
The state’s seasonally adjusted unemployment rate was 6.2 percent in August and September — record lows according to the Department of Labor and Workforce Development.
Improving the economy has been the primary mission the Dunleavy administration’s first year in office.
Gov. Michael J. Dunleavy said there is still ample room for future economic growth but he’s encouraged about what the unemployment rate points to.
“There is optimism in Alaska’s economy, and this is just another indicator that we are heading in the right direction,” Dunleavy said in an Oct. 21 statement. “Private investment is up, GDP is up, personal income is up, and unemployment is down — these all point to an improving economy.”
The state’s gross economic production, also referred to as GDP, has been on the increase since bottoming out at $49.4 billion in 2016, according to the Federal Reserve Bank of St. Louis. It hit just more than $54 billion in 2018 for 9.3 percent growth over two years. Additionally, according to the federal Bureau of Economic Analysis, or BEA, Alaska’s GDP grew 3.9 percent from the fourth quarter of 2018 to the first quarter of 2019.
Personal income in the state also grew 5.6 percent in the second quarter of the year, a BEA release states, which was greater than the national average of 5.4 percent.
However, economists often note that GDP, particularly in Alaska can be a misleading statistic because the value of the state’s economic activity is closely tied to the price of oil and other market resources such as gold. The state’s recent GDP growth generally tracks with trends in oil prices over the past couple years, which bottomed out in early 2016.
Department of Labor economist Neal Fried also highlighted that the job growth, while encouraging, is very small even in a state with a small workforce.
“We’re talking about real small differences. It’s kind of amazing how small they are. The upside and downside are not very far apart,” Fried said in an interview.
The recession petered out near the end of 2018 with monthly job losses of less than 1 percent year-over-year. On the flipside, the gains have been similarly small.
Many economists in the state predicted the roughly $1.2 billion in state government budget cuts Dunleavy proposed early in the year would push Alaska back into recession but the state’s economy has continued to grow with the more moderate budget cuts of approximately $650 million instituted by the Legislature and governor.
Alaska indeed enjoyed record-low unemployment in August, but year-over-year employment growth for the month was about 2,200, or 0.6 percent.
Numerous sectors were still contracting in August, with manufacturing, financial activities, information, professional and business services and retail all losing at least 100 jobs during the month compared to August 2018.
Those losses were overcome by gains of 500 to 600 jobs each in the closely tied mining, oil and gas and construction industries, according to Labor statistics.
Month-to-month, the state actually lost approximately 2,400 jobs from July, highlighting the extremely seasonal nature Alaska’s economy — fishing and tourism in particular — even when it is growing.
September’s employment growth of about 1,900 jobs was 0.5 percent year-over-year growth. It was again led by the mining, oil and gas and construction trades, with continued losses in retail and information and overall losses in state and local government totaling 500 positions, according to the Department of Labor.
Fried also said Anchorage, the state’s economic center, has lagged behind the rest of Alaska. He attributed it in part to most of the new oil and gas jobs being in North Slope work, rather than office positions in the city.
With that in mind, he also noted that those jobs still benefit Anchorage, as many Slope workers live and spend their money there.
Fried also said the state’s unemployment rolls are almost certainly smaller due to the continued strong Lower 48 economy. The national unemployment rate fell to a 50-year low of 3.5 percent in September.
“Fewer people are coming here looking for work; more people are being attracted elsewhere in the country because the job market is so good and that’s effectively kept our labor market pretty good,” he said. “It’s not a bad labor market in Alaska in spite of the fact that we have relatively soft growth.”
Because of the remarkably low unemployment rate nationwide, which Fried characterized as “almost new territory” for the country — economists usually consider rates in the 5 percent range full employment — Alaska’s record-low unemployment rate is still the highest in the nation.
“It’s amazing that you can say both of those things,” Fried said.
Elwood Brehmer can be reached at [email protected].