National economic growth could be good for Alaska

Conventional wisdom no longer holds true as state's economy is more diverse

Posted: Monday, December 01, 2003

FAIRBANKS - Alaska's oil-dependent economy is less diverse than the nation's as a whole, but recent national growth could still carry good tidings for the state this holiday season and beyond, according to economists.

While some longtime Alaskans may expect the state's economy to sink when things are going well nationally, and do well when there's a national downturn, that's not so much the case anymore, said Neal Fried, a labor economist for the state Department of Labor and Workforce Development.

"What was bad for the U.S. in the '70s was good for us, and that was high, high oil prices," Fried said.

But Alaska is less dependent on oil now, and the state's economy still stayed fair when the national economy boomed between 1997 and 2000.

The gross domestic product - a tally of all the goods and services produced in the country - grew faster than expected between July and September, and may signal an improved economy.

Fried said that in general the national economic upswing could have some positive side effects here.

"People will have more money to spend, they'll feel more secure in their future, they'll be more likely to travel," he said.

Unfortunately, there are no current state domestic product statistics that directly compare Alaska to the country as a whole. Instead, statewide employment often is used as one of the most up-to-date indicators of Alaska's economic health.

In October, employment in Alaska had grown by about 3,900 jobs, or about 1.3 percent, over last year's numbers, Fried said. That continues a trend in which Alaska jobs increased between 2000 and 2003 despite national employment dropping slightly over the same time period.

Craig Wisen, an assistant professor of finance at the University of Alaska Fairbanks, noted that the recent report of a higher than 8 percent annual rate increase in the national gross domestic product is in some ways old news.

"Water under the bridge," he said. "It does bode well for future, fourth quarter and beyond growth rates for '04, but no one's expecting a continuation of the 8.2 growth rate."

Nor would they necessarily want to, he said. Too much growth too soon may be unhealthy in the long run and spur inflation.

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