JUNEAU — Alaska’s economy seems in good shape and is continuing in a long-term, slow-growth trend, although questions around the national recovery hang over Alaska as well as the rest of the U.S., according to the Northrim Bank annual economic outlook report.
The Anchorage-based bank held its annual economic outlook luncheons for business and community leaders in Fairbanks, Anchorage and Juneau on April 9, 10 and 11.
Northrim Vice President and Economist Mark Edwards painted an overall picture of a state economy in sturdy shape, citing building permits statewide up 9 percent; loan delinquencies at 3.6 percent for 1-4 unit residential properties in the fourth quarter 2013, compared with the national rate at 6.7 percent; and a 1 percent foreclosure rate compared with 4.9 percent for the nation.
In residential loan delinquencies, Alaska was third-best in the United States, Edwards said. In foreclosures, Alaska was fourth-best. The increase in building permits statewide is the biggest gain since 2007, he said.
In unemployment, the Alaska statewide rate of 6.5 percent is roughly on par with the national rate of 6.7 percent. However, the Anchorage unemployment rate of 4.7 percent and the Juneau rate at 4.6 percent reflect tight labor markets in those communities, Edwards said.
One negative trend is that population growth appears to be slowing and an out-migration of people leaving may be influencing that.
Edwards said population growth was 0.6 percent last year, to a total of 736,399, and was the slowest rate in 17 years. There was a natural increase (births) of 7,420 but an outflow of 2,848, likely due to improving economic conditions in the Lower 48, he said.
“We may be also leaking retirees to other states,” Edwards said.
As Alaskans retire they are more prone to relocate to other states, in contrast to the Lower 48 where retirees may stay closer to home.
Other indicators are healthy, but indicate an economy is a slower-growth mode. Per-capita income of $50,032 was ninth-best of the 50 states but the rate of income growth per capital, at 1.7 percent per year, was 47th in the nation, Edwards said. The U.S. average per capital growth rate was 2.6 percent.
Edwards cited a rebounding tourism industry as one bright spot for the state. Two million visitors are expected this year, for the fourth year in a row. Visitors are up 7 percent from two years ago, and cruise ship passengers, a crucial driver for the visitor industry, are up 13 percent over the same period.
“Employment (in tourism) was up 3 percent in the last two years, to 39,000. Labor income was $1.3 billion and total (tourist) spending was $3.9 billion. Both numbers were up 6 percent over the last two years,” Edwards said.
The visitor industry also generated $179 million in revenue for the state and local governments in Alaska, he said.
Employment data from the state Department of Labor and Workforce Development affirms the modest growth rates Edwards cited. Statewide wage and salary employment was 319,200 in January, the most recent month for which confirmed data is available, compared with 314,300 in January 2013.
Statewide employment has been gradually growing for many years and crossed the 300,000 mark in January 2008.
The national economic trends that also influence Alaska include persistent government deficits and a concern that government agencies are crowding out private industry. Also, because of the heavy reliance on government in the economy, “it’s difficult to price assets and to see a forward path for companies in certain fields without knowing what the government is going to do,” Edwards said.
Like most economists, Edwards expressed concerns over the slow “jobless” national recovery from the 2009 recession. The economy overall is on a gradual rebound but employment growth is not keeping pace, Edwards said. That means the powerful stimulus of consumer spending is still lacking in the recovery.
Tim Bradner is a reporter for the Alaska Journal of Commerce.