Economic forecasting is always something of an exercise in prognostication — that is, gazing into a crystal ball and hoping to see Alaska’s future.
But state economist Neal Fried said it’s particularly difficult to figure out what next year is going to look like.
“If there’s someone out there that can forecast what’s COVID is going to do … and then, of course, guess what consumer behavior is going to be, that’s a tough one,” he said.
Alaska’s economy, much like the rest of the country, has taken a hit from COVID-19, though some of the impacts won’t be clear for a few years.
Fried laid out some of those details at the Resource Development Council’s annual conference on Wednesday.
“How does what’s going on now, this COVID recession compared to previous ones? It’s already lost more jobs than any of the previous ones,” he said. “Is it going to be the worst recession? I don’t know.”
The COVID-19 pandemic came at a particularly rough time for Alaska. The state was just beginning to climb out of its recession from the 2015 oil-crash, and Fried said everyone expected that growth to continue this year — especially in the tourism industry
Instead, as the pandemic unfolded and shut down the tourism season, businesses closed and a record number of Alaskans found themselves out of work.
“If you look at April, we peaked at almost 70,000 individuals in Alaska receiving unemployment. And you know, when you think about a workforce of about 320-330,000, that’s a lot of folks,” he said. “The numbers have come down some but still remain sort of stubbornly high.”
Nearly every sector of the state’s economy lost jobs. One, federal employment, added jobs this year. That’s because of hiring for the U.S. Census.
There are indicators that the pandemic scared away some private investment. Fried said three new hotels that were supposed to open in Anchorage never materialized.
And some parts of the state have felt the impacts of the downturn more than others. Interior Alaska has had a boost from the military. The Anchorage region has been buoyed by growth in the Mat-Su.
But it’s a different story in Southeast.
“Southeast has just been hammered,” Fried said. “It’s been hammered by two things. Of course their very big dependence on the cruise ship and visitor industry, and then to add insult to injury they had a lousy fisheries season. So they just got hit very, very hard.”
The pandemic was swift and, in some ways, surprising in how it impacted the state’s economy.
“We went basically from a near, if not record low unemployment rate … to record high the next month,” he said.
Fried said state economists have been looking for new ways to measure its impact and the health of specific sectors.
For instance, Fried said they are looking at the number of people who have been stopped and frisked every week at the Anchorage International Airport for the last few years and comparing it to this year. They’re using it as a way to measure the drop in travel to Anchorage.
“I didn’t even know this data exists,” Fried said. “But you can see transportation in Anchorage, passengers dropped as much as 86% and it stayed quite low. You know it’s still 50% below where it was a year ago up to the current period. It is beginning to improve. When you look at these numbers for Juneau, Fairbanks, they look very similar and in some cases even worse.”
They’re also looking at cargo landings at the Anchorage airport. There has been a sharp increase in cargo traffic there during the pandemic. Fried and others have said it was the world’s busiest airport during parts of 2020. He attributed that volume, in part, to supplies coming in from China and other parts of the world, and to the explosive growth of e-commerce.
There are a few bright spots in the state’s overall economic health.
For one, the military is still growing in Alaska. Personnel are moving to the state along with the new F-35 jets.
The marijuana industry is hitting record-high sales.
And Fried said mining did well during the last recession and is still doing well during this one. Mineral prices are good right now, he said, and it’s an indicator that the state’s economy may be more diverse than many people think.