Record oil prices, strong economy
Alaska’s Gross State Product reached an all-time high last year, thanks to high oil prices.
“You may not feel like it, but you are sitting in the most prosperous economy Alaska has ever had,” Northern Economics Senior Economist, Jonathan King, told Juneau Chamber of Commerce members Thursday. He described 2011 as “most pleasant,” which sounds like an understatement:
“The fact of the matter is we hit 108 dollars a barrel average last year, thanks to the Arab Spring and issues with Iran. That allowed us to reach a new record for Alaska’s economy: 52 billion dollars,” he said.
King was one of three economists speaking at the World Trade Center Alaska Statewide Economic Forum held in Juneau.
The gross state product is the economic output of a state. Oil is Alaska’s greatest economic driver and funds about 90 percent of state government. But like state leaders, King warned that Alaska’s prosperity cannot be sustained due to declining oil production.
King said predictions for 2011 rang true, and show Alaska again had the strongest economy of any state. Alaska added 5,200 jobs and unemployment remained lower than the national rate.
Northern Economics is an Anchorage-based reserach firm. King said the company’s annual confidence index is also up among Alaska households.
The survey asks Alaskans how confident they are about their household, local community and the state’s economy.
The 2011 results show 51 percent feel good or very good about their personal household finances; 38 percent feel good about the economy in their community, and 36 percent feel confident about the state’s economy.
“We see this consistently that the farther the economy that we’re asking about is from the person the less confident they are in it,” he said.
The overwhelming negative news on the national recession and slow recovery may have something to do with people’s perception of Alaska’s economy.
The survey also shows less confidence among Alaskans that the economy is improving.
“The important thing is the people who think things are getting better are greater than the people who think things are getting worse,” King said. “But maybe the most important thing is things are staying the same. And I think that’s very reflective of our economy right now. We’re in a very slow growth, stable economy and that’s been reflected over the last couple of years.”
As for 2012, King expects Alaska will experience mild growth; he sees another good year for oil, mining and fisheries, but says the state will see a major decline in federal funding.
For the fifth year, Wells Fargo has sponsored the economic forum in Fairbanks, Anchorage and Juneau, always held in January.
Global economist Aryan Vasquez the strongest economic growth is in Asia, particularly China, but he said Latin America is a close second.
World Trade Center Alaska Director Greg Wolf said China is not only becoming Alaska’s best customer, but is also investing in the state.