Bank economist forecasts steady 2002 Alaska economy
Sung Won Sohn, chief economist for Wells Fargo Bank, believes that Alaska should post job growth of 1.7 percent this year and 1 percent for 2002. Sohn spoke Nov. 30 at the Sheraton Anchorage Hotel during the Resource Development Council for Alaska Inc.’s annual conference.
"My conclusion about the Alaska economy is that the U.S. economy may be in recession, but the Alaska economy is not," Sohn said.
Sohn, who studied at the University of Pittsburgh and at Harvard Business School, once served as chief economist on President Nixon’s Council of Economic Advisers. He joined Wells Fargo in 1974. Sohn is now based in Minneapolis.
He cited strengths of the Alaska economy including a relatively low unemployment rate. Major projects like a proposed national missile defense system and drilling on part of the Arctic National Wildlife Refuge could help the state, he said.
Alaska may see challenges, though, in the coming year, he noted. A tight labor market restricts job increases, he said. Declining oil prices also will have an affect, Sohn said.
Tourism in Alaska may see a slowdown next summer because many people are hesitant to fly following the terrorist attacks.
"Next spring things might be different, and they might come to Alaska anyway. Right now people are afraid to fly," he said.
Alaska’s total exports could see changes due to a struggling economy in Japan, which accounts for 52 percent of the state’s exports, Sohn said.
Decisions around the world affect the Alaska economy, he said. A resource-based economy is influenced by price swings for oil or seafood, he said.
Nationally, Sohn expects the economy to turn around, perhaps beginning in the first quarter of 2002 and at least by midyear.
"I don’t believe the economy is in such bad shape," he said.
One reason Sohn believes in economic rebound is due to a low U.S. jobless rate of 5.4 percent, compared with 11 percent in 1982 or 8 percent during the last recession in 1990.
Also, economic stimulus by the government will help, he said.
Interest rate cuts from the Federal Reserve Board also aid Americans, and Sohn expects future cuts, although interest rates could climb by the second half of 2002.
Declining oil prices affect Alaska’s economy but are a boon to the rest of the country, he said.
"The bottom line is as you look at the U.S. economic growth you should see growth for the first quarter of next year," Sohn said, contrasting that expectation with the current recession.