For the last 18 years, across the board, Alaska’s economy has expanded, and one state analyst sees no reason why the state shouldn’t keep that trend going in 2006.
“We’re finishing up our 18th year of uninterrupted growth, I don’t expect next year to change,” said Neal Fried, an economist with the state Department of Labor and Workforce Development.
As we enter 2006, Fried said it is hard to find a specific industry that appears to be struggling. “It’s kind of hard to see any significant negatives for 2006,” he said.
While some sectors, such as health care, may not be experiencing as explosive growth as they have in the past, Fried said even small increases in larger fields can have a measurable effect on the economy.
“As long as there’s a toehold that still exists in the economy, there’s very often a chance that that industry will experience a rebound,” he said.
In terms of job creation, the health care industry has generally been growing over the past 30 years and has been the economy’s star performer the past few years, Fried said.
That big growth spurt seems to have slowed some,” he said.
Even so, only a small amount of growth is needed to produce a large effect when the industry has a sizeable presence in the economy.
“That relatively small growth translates into a relatively large number of jobs,” Fried said.
Another bright spot has come with a small, but noticeable, rebound in hiring for oil industry related jobs.
“It’s not big, but there’s some sort of rebound in the oil industry,” he said. “That is one (sector) that is a positive right now in Alaska that is good for the North Slope, good for anywhere that supplies the work force.”
However, while high prices may be helping fuel the industry’s growth, those prices may also be masking the negative impact of declining production in Alaska, Fried said.
Another resource-driven industry, mining, is seeing a growth spurt in hiring with several mines preparing to either start construction or production in 2006. Fried said such spurts are a trademark of the industry.
“It’s an industry that grows in spurts you get a few mines then you don’t have any new ones. Then it stays stable and then you get a new one, and we move up a step,” he said.
Even potential mines, such as the Pebble prospect near Iliamna on the Alaska Peninsula, can spur hiring, although not all the credit may go to the mining sector.
“There’s a lot of activity tied to looking at those (potential mines) and assessing them,” Fried said. “A lot of that doesn’t show up in mining, but in engineering firms and consulting firms, in Anchorage and Fairbanks particularly.”
Fried said it is not uncommon to have a sector like mining lurk in the shadows for a few years only to later experience a surge.
“As long as there’s a toehold that still exists in the economy of an industry that may have seen better days in the past but as long as it’s still there, there’s very often a chance that that industry will experience a rebound,” Fried said.
Fried said that rule has also applied to the military’s effect on the economy in different regions of the state. With the effects of Prudhoe Bay and the oil boom coming on line, the military’s economic effect was muted, Fried said. However, in recent years, especially as the military has reconfigured itself, Alaska has seen the benefit of more troops and activity.
One area of the economy that has recently seen surprisingly steady growth has been construction, Fried said. In the past, Fried said construction’s growth has been tied into a boom and bust cycle. Fried said different factors have contributed to that growth in recent years.
“Some years what’s given it extra oomph is commercial office space. In other years its schools or hotels. Each year it’s been a little different, the ingredient that has pushed it forward,” he said.
Fried said the financial industry, which includes banks, mortgage brokers and credit unions, among others, has also done well in recent years, largely due to low interest rates.
“Interest rates have been a real blessing for that industry,” he said.
As for the retail sector, Fried said most of the activity will take place in the Matanuska Valley and Fairbanks, with Anchorage seeing some growth.
While the state as a whole has capped 18 years of economic growth, Fried said the story can vary greatly from region to region. Fried said, statewide, the terms boom and bust haven’t really applied for decades.
“We’re not boomin’, by any means,” he said. “There’s one area in the state you might be able to use that term, and that’s the Valley.”
As far as the state being immune from another boom and bust cycle, Fried would not speculate, only noting that he expects the economic trends of the last few years to continue.
But, he adds, anything can happen.
“Broadly, we’ve had a stable 18 years of growth,” he said. “When you get going that long you begin to believe that’s going to be forever, but you’ve got to remember that nothing is forever.”
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