Fried: Alaska economy slow to recover from COVID pandemic
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Kristen Nelson Petroleum News
There has been talk that the national economy will recover from the pandemic recession in 2022, Neal Fried, senior economist with the Alaska Department of Labor and Workforce Development, told the Resource Development Council’s 2021 annual conference Nov. 17.
While the national economy may not fully recovery in 2022, it will get pretty close to it, but that’s not going to happen in Alaska, Fried said.
Looking at the last three years in Alaska, 2019 was the first year of economic recovery after three years of recession which began in 2016. Terrible things happened to the state’s economy in 2020, he said, with 2021 a year of recovery, seeing employment growing in most sectors - but with a way yet to go.
Preliminary figures for 2021 show employment gains of 2.7%, 6,300 jobs across all industries in the state, Fried said.
But the oil industry is not moving in a positive direction, with preliminary January to September figures showing a loss in the oil industry of 1,678 jobs between 2020 and 2021, he said.
State recessions In 2016 the state lost 5,500 jobs, a 1.6% drop, followed by a loss of 4,300 jobs in 2017, 1.3%, and 1,200 jobs, 0.5%, in 2018.
2019 saw employment turn around, with a gain of 1,600 jobs.
That was followed by a 2020 loss of 27,400 jobs, a drop of 8.4%.
While preliminary 2021 job numbers are up, the state has slipped back to the employment numbers it had around 2003, Fried said.
National data show that states which are dependent on tourism or oil are having a hard time, with more jobs lost and a slower recovery from those losses. Alaska is one of five states which have recovered less than 50% of those losses, Fried said. Louisiana, New Mexico and Wyoming are oil producing states. Hawaii is tourism dependent.
And Alaska experienced a double whammy, Fried said, because it has both large oil and large tourism industries.
While this is the first time the state of Alaska has shared a recession with the rest of the country, and now a recovery, Alaska got hit harder than most other states, he said.
Oil industry Numbers are grim for the oil industry Fried said, which has gone from a peak of 15,300 jobs in 2014 to 6,800 this year - equivalent to employment numbers for the industry in 2005.
Oil is one of the few industries that has seen no recovery yet. There has been a little growth in recent months, but very, very little, he said.
On a positive note, Fried said oil prices are better and that is very, very important for recovery in the industry to occur.
But generally oil patch recovery in Alaska takes longer than elsewhere because the state is so project oriented.
Fried said he thinks we will probably see more positive numbers in 2022.
Overall numbers Of the 2020-21 preliminary employment change numbers, totaling plus 6,300, the largest gain was in leisure and hospitality, which, Fried noted, had the largest losses. That sector was up by 3,022. Other major sectors include transportation, up by 1,222, retail by 1,167 and health care by 989.
The oil industry loss of 1,678 was the largest, with a few other sectors (financial, information and federal government) showing losses from a handful to a few hundred.
The state has seen modest population declines since 2016 and Fried said he doesn’t expect the 2021 data to change that.
But it’s not because more people are leaving Alaska - it’s because fewer are moving to the state, something Fried said happens when Alaska’s economy underperforms the national economy. And prior to COVID, the national economy was red hot, he said.
Alaska ranks last in national migration rates, Fried said, and recently has been losing population in every age group.
- KRISTEN NELSON
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