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Providing coverage of Alaska and northern Canada's oil and gas industry
December 2018

Vol. 23, No.48 Week of December 02, 2018

Current recession state’s longest at 3 years

Fried tells RDC that employment figures could start to turn around in 2019, but actual economic recovery would take several years

Kristen Nelson

Petroleum News

Alaska’s current recession, only the third in the state’s history, is now its longest at three years, but not its worst - that distinction is held by the states great recession following the mid-1980s drop in oil prices, Neal Fried, economist with the Alaska Department of Labor and Workforce Development, told the Resource Development Council’s annual conference Nov. 14.

Fried illustrated job growth since 1980, showing the sharp drop after the mid-1980s oil price crash, and 21 years of steady growth from 1988 to 2008. There was a dip in 2009, with a few jobs lost, followed by serious jobs losses in 2016 and 2017, continuing at a slower pace in 2018.

A slide accompanying Fried’s talk shows employment falling by 1.9 percent in 2016, by 1.5 percent in 2017 and 0.8 percent for January-September of this year, figures which are still very preliminary, he said.

In absolute numbers, the job loss was about 5,000 jobs in 2016, Fried said, about 4,500 jobs in 2017 - and some 2,000 from preliminary numbers through September of this year.

The biggest job loss so far this year, in retail, is actually more related to national companies, and not to Alaska’s economy, Fried said. Retail shows a loss of 900 jobs so far this year, but that’s related to the closure of Sam’s Clubs and Sears and the coming closure of Bed, Bath and Beyond (the Glenn Square location is closing). The other huge force bearing down on retail is e-commerce. While the national economy is booming, he said, retail is declining as a result of e-commerce inroads.

End with a whimper

On the plus side, construction was down 1,500 jobs last year, but so far this year it’s up 300 jobs.

And while oil industry jobs are still down 600, last year those jobs were down by 2,100.

Fried said the economy is where it was between 2010 and 2011, after peaking in 2015 - that’s how much ground we’ve lost, he said.

So how does a recession come to an end, he asked? Well, leisure and hospitality numbers have turned positive: people are eating out more. Transportation has remained positive, partly tied to tourism and partly tied to international air cargo.

And health care is growing as the population grays.

“Recessions end with a whimper,” Fried said, and hopefully sometime next year employment will start to turn positive. There is some optimism, he said, among those who make forecasts that employment could turn somewhat positive in 2019.

But that doesn’t mean the economy will have recovered. That will require getting back to where we were in 2015, he said, and will take three to four years.

For some sectors, it will take longer: Construction is down to where it was in 2001, he said, and a lot more recovery is required there.

Leaving state?

Fried reviewed some research on those who lost jobs in the recession. Hardest hit industries were oil and gas, construction and state government. Comparing 2015 to 2017, Fried said, of those who lost oil jobs in the recession, 86 percent were still working in Alaska: 60 percent in the oil industry; only about 7 percent had left the state.

This is basically true for the other industries, as well: The state just didn’t see a huge outflow of workers, he said.

The outlook for the oil sector is very positive, with good reason to believe oil industry numbers will turn positive soon, he said. Nationally oil employment has been recovering for more than two years.

As for the state’s population overall, it fell slightly in 2017, down less than half a percent. There were more births than deaths in the state, but that number wasn’t large enough to overwhelm the negatives from outmigration.

There has been a period of five years of outmigration, he said, and with prosperity elsewhere, fewer people are moving to Alaska.






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