State economy powers through recession

Posted: Thursday, August 26, 2010

With the nation still struggling to pull itself out of recession, Alaska is in the welcome -- but decidedly unusual -- position of having one of the nation's strongest economies.

"We're a place of envy right now," said Neal Fried, a state labor economist who has watched the state's economy for decades.

The state's unemployment rate in July dropped to 7.7 percent, down from 7.9 percent in June and from 8.1 percent in July of 2009. The national unemployment rate is at 9.5 percent, where it has hovered for more than a year.

Alaska's boom-and-bust economy typically posts much higher unemployment rates than the national economy, Fried said.

"This is the first time we've ever seen a (year) of the unemployment rate coming in below the national average," he said.

Many of Alaska's industries have shown to be largely immune to the ongoing national recession, which has hit the manufacturing and construction sectors hardest.

Fishing, oil, government and mining are all important Alaska industries that are evading the impacts of the recession.

"When you look at what makes our economy tick, its largely different than the national average," Fried said.

Some parts of the economy, such as manufacturing and real estate, faltered elsewhere but not in Alaska.

Alaska's tiny manufacturing sector is holding up well, mostly due to the thriving seafood industry, Fried said.

The continued strength of seafood prices, even in the face of a recession, is somewhat remarkable, said Eric Norman, vice-president and general manager at Taku Fisheries/Smokeries in Juneau.

"It's a little bit of a surprise to us the levels that fish prices have gone to, especially halibut and black cod," Norman said.

Despite the higher prices, they can still move what they can bring in, even with the recession.

"We've gotten some comments out the market but they're still playing ball," he said.

That's meant full employment for a big crew, as many as 100 workers. A solid salmon season has helped, as well.

And Alaska's real estate industry never soared to the heights of some others, and therefore had less room to fall.

"Our real estate market was better in 2007 or 2008 than it is today, but while ours slowed, we haven't had the balloon pop that others have had," Fried said.

High oil prices have also benefited the state in a big way, providing strong employment in the industry, though they are down. ANS West Coast crude enjoyed an average spot price of $133.78 a barrel in June 2008, according to information on the Alaska Deartment of Revenue's website. The averge spot price in July of this year was $76.53. In addition to jobs, oil revenues fund state and local government operations, which further stabilize the economy.

Other states where oil is an important economic driver, such as North Dakota and Texas, are also doing at least somewhat better than the national average, Fried said.

The federal government also provides much employment in Alaska, another source of stability.

"Government jobs tend not to have the volatility of other sectors of the economy," Fried said.

"The mining industry has been booming too, Kensington Mine opened with a price of gold at $1,200 an ounce. In some ways, that's an industry that's thriving because of uncertainty in the world economy."

While Alaska has an unemployment rate lower than the nation's, the state's rate was even lower a few years ago. There are more people working in both Juneau and Alaska than there were a few years ago, Fried said.

The most recent numbers for the first quarter of 2010 show 17,035 employed in the capital city, compared to 16,722 in the same quarter of 2009.

Juneau's unemployment rate, not seasonally adjusted, dropped in July to 5.2 percent, one of the lowest in the state, and down from 5.5 percent in July 2009.

The national recession is likely keeping the unemployment rate from falling even lower. Alaskans who lose jobs are less likely to leave the state, while others may move here looking for work.

Not all Alaska industries have been as lucky as oil, fishing and mining, and some have been suffering along with the nation.

"The visitor industry is very strongly correlated to the health of the national economy, as is the air cargo industry," Fried said.

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