2020 Forecast: Slow and steady improvement for economy
The New Year should be another one of incremental growth for Alaska’s long-sluggish economy.
Following a year defined by uncertainty in which economists broadly concluded that Gov. Mike Dunleavy’s plan for drastic state budget cuts of more than $1.2 billion would send Alaska back into a recession, the early picture for 2020 looks a bit more stable.
Dunleavy has since retreated from his cuts-only plan and instead proposed a flat state budget of about $4.5 billion in unrestricted general fund spending for fiscal year 2021, which starts July 1.
While most economists have yet to release their formal projections for 2020, the general sense is that Alaska will continue its slow recovery from three years of recession. Alaska’s banks reported solid earnings and generally declining rates of loan delinquencies in their third quarter 2019 financial reports and bank leaders said barring unforeseen challenges the positive trends should continue.
Alaska added approximately 1,100 net jobs year-over-year in November, a 0.3 percent increase despite 600 fewer state government jobs last month, according to the state Labor Department.
The state job losses were mostly due to budget cuts at the University of Alaska.
Statewide, the unemployment rate was 6.1 percent in November, which was a slight sequential decrease from October and a 0.2 percent decrease from November 2018.
Gov. Mike Dunleavy, who has made “Alaska is open for business” a mantra of his tenure in office, has also touted personal income growth in the state over the past year.
While it’s unclear at this point exactly what impact the loss of several hundred generally high-paying oil industry jobs associated with BP’s sale of its Alaska assets to Hilcorp Energy will mean for the broader economy, other companies working on the North Slope such ConocoPhillips and Oil Search are adding workers for exploration drilling and development of several large oil projects. Oil industry employment statewide was up 4.3 percent year-over-year in November, according to Labor statistics.
In the Interior, the first round of F-35 fighters are scheduled to arrive at Eielson Air Force Base in April, with additional jets arriving through 2022, Air Force officials have said.
Work at Eielson to prepare the base for the 54 jets has already provided a substantial boost to the Fairbanks-area economy and the roughly 3,300 people — Air Force personnel and their families — that will eventually move to the Interior along with the jets will also require significant new home construction.
In Anchorage, officials at Ted Stevens Anchorage International Airport have announced upwards of $700 million of potential new developments at the airport, which supports approximately 10 percent of the jobs in the city, according to the Anchorage Economic Development Corp. The development proposals are largely warehouse projects meant to facilitate the airport’s growing international cargo business.
Anchorage’s location between Asian manufacturing centers and North American consumers has long made it a convenient place for cargo freighters to refuel, but shippers now appear to be taking greater advantage of unique trade exemptions that allow for cargo to be sorted and swapped between aircraft on international flights without violating federal trade laws.
Finally, the economic prospects for Southeast might be the most muddled of any region in the state in the coming year. The region’s booming tourism industry is expected to keep growing; however, it’s unclear what the ramifications of significant long-term reductions in ferry service will be, particularly for smaller communities where the ferries are important for hauling bulk goods and equipment for businesses as well as passengers.