National economy's woes nip at Alaska

So how is Alaska's economy doing?

How are you doing?

Alaskans, it seems, are faring fine compared to people elsewhere.

"We're in a better position than a lot of our sister states," said Dan Robinson, an economist with the Alaska Department of Labor.

But look out. We're beginning to see some worrying signs that the recession gripping the rest of the country eventually could bite us here. Among the indicators: rising unemployment, mounting home foreclosures and high credit-card debt.

Beyond this, brows are beginning to furrow over the precipitous decline in oil prices. Oil revenue pays for most of the cost of state government and is a vital fuel for the entire Alaska economy.

On Friday, Alaska crude oil closed at $35.61, a far cry from the peak of $144 in early July.

And here's something else: Investment troubles on faraway Wall Street have done a number on the state's main savings account, the Alaska Permanent Fund, which now has a market value of less than $28 billion, having lost about $9 billion over the past four months.

Some Alaskans, understandably, are looking to brace themselves for harder times.

"We're hearing more people saying they want to tighten up, get a handle on our budget," said Rick Thomas, of the nonprofit Consumer Credit Counseling Service of Alaska.

Here's a quick look at a few basic indicators that say something about the state's economic health, and where we might be heading.

YOUR JOB

Unemployment in Alaska took a startling jump in October, up to 7.4 percent from 6.7 percent the prior month.

The jump is the largest Robinson can ever remember seeing, and it's the first time since February 2005 that the state's unemployment rate has cracked 7 percent.

Robinson isn't sure the jump is real. Rather, it could be a quirk related to data adjustments he makes to account for seasonal employment, which seemed to tail off early this fall.

He's anxious to see what the November unemployment rate is once the numbers come in next week. If Alaska unemployment remains significantly above 7 percent, well, that could mean a fundamental shift in the economy rather than just a data quirk, he said.

Nationally, the unemployment rate was 6.5 percent in October, rising to 6.7 percent last month.

Unlike the rest of the country, Alaska has continued to add some new payroll jobs while the country as a whole is losing jobs amid the recession, Robinson said.

The oil boom that lasted through much of the year is what drove those new Alaska jobs, he said.

YOUR HOME

After the exhilarating surge through most of this decade, the average sales value of single-family houses in Anchorage has hit a plateau at about $328,000.

Be thankful, because home values in many other states such as California and Florida have plunged, and foreclosures are rampant.

Locally, foreclosures are rising but not nearly at the national rate, reports First American CoreLogic, which tracks national real estate trends. The firm reported 360 new and existing foreclosure filings in October in the Anchorage area, compared to 266 in October of last year.

Richard Ullstrom, an Anchorage foreclosure attorney, said his law firm handles many of the state's foreclosures, with the typical client being a financial institution such as a bank or mortgage lender looking to recoup its money.

Ullstrom said his firm is handling more foreclosures, but still not even half the number seen in Alaska's late-1980s real estate crash.

Why are foreclosures on the rise?

Ullstrom attributes much of it not to a recession but to overexuberant real estate investors bailing on bad bets.

"Some people got sold on the idea of investing in real estate back when things were going well," he said. "What we're seeing now is, some little real estate empires are crumbling."

He's at a loss to say what the rising foreclosures really say about the state of our local economy.

"It obviously isn't a good sign, but at the same time, I don't know how bad it is," he said.

YOUR CREDIT

Quick, can you guess which state has the highest average balance on each bank credit card?

That would be Alaska, where the average for the third quarter of this year stood at $2,486, according to TransUnion, a credit reporting agency. That compares to the U.S. average of $1,742.

So, what's up with Alaskans and their credit cards? Are people so strapped they're putting everything on plastic?

Thomas, of Consumer Credit Counseling Service, believes Alaskans just exercise their credit cards a bit more vigorously than people Outside.

Credit cards are especially important for Alaskans ordering goods by mail -- stuff that might not be available in villages or even in the main cities, Thomas said. Alaskans also take big advantage of credit cards that award airline miles on purchases, he said.

Credit-card debt typically accounts for as much as 80 percent of the debt clients carry when they show up at the counseling service for help, he said.

But such debt doesn't seem to be rising locally, Thomas said. He said his clients now have an average of $23,000 in debt, about the same as a year ago.

Alaska bankruptcy filings are up this year, about 25 percent, U.S. Bankruptcy Court figures show.

Still the counseling service isn't seeing any significant surge in the number of people seeking help in sorting out their finances.

"Our client base hasn't changed," he said. "But we're seeing more people coming in inquiring about bankruptcy. We're seeing more people coming in inquiring about housing situations."

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Find Wesley Loy online at adn.com/contact/wloy or call 257-4590.