Alaska's economy and the pandemic

Abstract

The Alaska economy has emerged from its longest recession in 2019. The decline in economic activity and government revenues was due to the severe decline in oil prices which resulted in deep spending cuts and significant private sector job losses. The current pandemic has resulted in a significant shock to all facets of the Alaska economy. In this paper, we provide a little bit of background on the Alaska economy, present new high frequency data to asses the extent of the current damage, and then present a forecast for the next 6, 12, and 18 months. In 2020, we anticipate the economy to end the year with almost 25,000 fewer jobs than in 2019. The decrease would represent a 7.4% relative to the previous year. In 2021, we expect the economy to slowly start regaining the jobs lost the previous year and grow at a rate of 2.2%. In 2022, we anticipate a continuing climb for the economy as it is expected to grow at 1.1% percent. By the end of 2022, the Alaska economy should be at about 95% of the pre-pandemic levels. It is important to note there are significant downside risks which could negatively influence the employment outlook.