"Southeast Simply Bought Hammered": Economists Attempting To See What Alaska's Pandemic Recession Is Coming To
Businesses across Alaska have closed due to the COVID-19 pandemic. (Courtesy photo by Hannah Lies / Alaska Public Media)
Economic forecasting is always a sort of exercise in forecasting – that is, looking into a crystal ball and hoping to see Alaska's future.
However, economist Neal Fried said it was particularly difficult to figure out what the next year will be like.
"If there's someone out there who can predict what COVID will do … and then of course can guess how consumers will behave, that's a tough question," he said.
Alaska's economy, much like the rest of the country, has taken a hit from COVID-19, although some of the effects won't be clear for a few years.
Fried set out some of these details at the Resource Development Council's annual conference on Wednesday.
"How's it going now, this COVID recession compared to previous ones? It has already lost more jobs than the previous ones," he said. "Will it be the worst recession? I don't know."
The COVID-19 pandemic came at a particularly difficult time for Alaska. The state has only just begun to emerge from its post-2015 oil crash recession, and Fried said everyone expected growth to continue this year – especially in the tourism industry
Instead, as the pandemic spread and the tourism season closed, businesses closed and a record number of Alaskans were unemployed.
“If you look at April, we in Alaska have peaked nearly 70,000 people who are unemployed. And when you think of a workforce of 320 to 330,000 people, that's a lot of people, ”he said. "The numbers have fallen a bit, but they are still stubbornly high."
Nearly every sector the state economy lost jobs. One, federal employment, created new jobs this year. This is due to the setting for the US census.
There are signs that the pandemic has scared away some private investment. Fried said three new hotels to open in Anchorage never materialized.
And some parts of the state have felt the effects of the downturn more than others. The interior of Alaska was boosted by the military. The Anchorage area has been strengthened by the growth of the Mat-Su.
But in the southeast it's a different story.
"Southeast was just hammering," said Fried. "It was hit by two things. Of course, they were very, very dependent on the cruise and visitor industries, and to add to the insult to injury, they had a bad fishing season. They just got hit very, very hard."
The pandemic was quick and, in some ways, surprising in how it affected the state's economy.
"We basically went from near, if not low, unemployment to hit a record high next month, ”he said.
According to Fried, state economists have been looking for new ways to measure their impact and the health of specific sectors.
For example, Fried said they are investigating and comparing the number of people stopped and searched at Anchorage International Airport each week for the past few years to this year. They use it to measure the decrease in travel to Anchorage.
"I didn't even know this data existed," Fried said. “But you can see that Anchorage transportation is down 86% and the passenger is staying pretty low. They know that up to the current period it is still 50% lower than it was a year ago. It's starting to improve. If you look at these numbers for Juneau, Fairbanks, they look very similar, and in some cases even worse. "
They also check cargo landings at Anchorage Airport. During the pandemic, freight traffic there increased significantly. Fried and other I said it was the busiest airport in the world for parts of 2020. He attributed this volume in part to shipments from China and other parts of the world, as well as the explosive growth of e-commerce.
There are some bright spots in the general economic health of the state.
For one, the military in Alaska is still growing. The staff is moving to the state along with the new F-35 jets.
The marijuana industry has record sales.
And Fried said the mining industry did well during the last recession and is still doing well during this one. Mineral prices are good right now, he said, and this is an indicator that the state's economy might be more diverse than many people think.