Alaska businesses and consumers generated $51 billion in economic activity during 2012 — the second highest year on record.
“Can’t break records every year,” said Marcus Hartley vice president and senior economist for Northern Economics. Hartley spoke in Juneau Thursday with Executive Director of the World Trade Center Alaska Greg Wolf and Lt. Gov. Mead Treadwell.
The nation’s economy looks pretty good, Hartley said, and Alaska’s continues to grow. However both economies face midterm challenges, he said. Nationally full employment is still years away. 100 months could pass before full U.S. employment is reached if projections are correct, Hartley said.
With Alaska face-to-face with dwindling oil production and an uncertain federal spending outlook, “things are looking partly cloudy or partly sunny depending on your view,” Hartley said. “We just hang on.”
Hartley’s forecast for Alaska’s 2013 gross state product to rise slightly from 2012. He said he expects it to total around $53 billion, the highest it has ever been, “Which is great,” Hartley said.
While financial and service industries will see an increase in the state’s gross product, natural resources industries are expected to decline, Hartley said. That is mostly due to declining oil production and reduced federal spending, he said.
The state is expected to gain 5,600 jobs in 2013, Hartley said. Some of this gain comes from the fact that it now takes more workers to get the same amount of oil out of the North Slope.
Hartley said the nation’s economy is coiled, ready to spring into action. Businesses and consumers are ready to join forces in an economic resurgence.
Nationwide house prices are lower, mortgage payments are lower and household debt is at a 40-year low.
“So consumers have a lot of money,” Hartley said. “We are ready to burst.”
Industry sectors in the U.S. are also “coiled springs,” Hartley said. After tax corporate profits as a percent of GDP are the highest since recording began in the 1960s, he said.
“That is a lot of money out there,” Hartley said. “Corporate America is ready to go. But we have the federal budget.”
Hartley said the nation’s $1.1 trillion deficit “is a pretty big gap.” It is the federal debt that is keeping the economy coiled, he said. In Alaska, declining oil production is acting as a drag. The state is now the third- or fourth-largest oil producing state in the nation, behind Texas, North Dakota and possibly California.
Alaska has a cash surplus now, Hartley said, but could start eating into reserves this year. A large fiscal gap could open up by 2023, he said.
“Now a lot can change,” Hartley said, “but this could be a scary picture.”
Alaska would need to shave 20 percent off of its budget, down to $5.5 billion, to remain fiscally stable, Hartley said.
“We are projecting continued mild growth with increased uncertainty,” Hartley said. “I’m not trying to ruin everybody’s afternoon here,” he said, “Well, I guess I am, a little bit.”
• Contact reporter Russell Stigall at 523-2276 or at firstname.lastname@example.org.