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Economist Robert Reich says Alaska's steady growth may face pitfalls

Scott Woodham,Eric Christopher Adams
Loren Holmes photo

Southcentral Alaska weather this summer -- cool temperatures with occasional sunshine and the random thunderstorm -- hasn't been much to write home about, but you take the good with the bad. And that could sum up Anchorage's economic expectations over the coming years, according to indicators presented at the 25th-anniversary luncheon Wednesday for the Anchorage Economic Development Corp.

Expect slow-but-steady growth in most of Anchorage's job fields over the next three years, led by the health care and oil-and-gas sectors, AEDC President Bill Popp told a packed crowd at the Dena'ina Civic and Convention Center.

Read the Anchorage three-year economic outlook here (PDF).

Most Anchorage industries are reporting job growth. Exceptions include banking, construction, and government-public sector employment. In fact, 2011 was the best year for job creation in Anchorage in a decade, Popp said. The city posted a 2.2-percent employment increase last year, or about 3,300 new jobs.

That's in contrast to the economic outlook for the rest of the country and worldwide, noted keynote speaker Robert Reich, a professor at the University of California Berkeley who's served in three presidential administrations, most recently as President Bill Clinton's Labor Secretary.

Reich noted economies in today's world are highly interconnected, and that trouble in one region can affect the entire planet, as illustrated recently by the global recession and slow recovery. He said that although Alaska's economy is somewhat insulated from such downturns because it relies mostly on resource commodities and government spending, the state may face challenges in coming years created by distant but "critical" economic factors. 

Potential trouble spots include the continued spread of the Eurozone debt crisis to other European economies, potentially diminishing the demand for products and services connected to Alaska. He also argued that China's recent economic growth is connected to Western consumer demand, arguing that the surge won't last long.

Closer to home, Reich predicted that rising health care costs and aging baby boomers will combine to create a crisis. He also predicted Congress will not act to address the “fiscal cliff” facing it in January 2013, and it will be forced to institute tax increases and spending cuts at the same time, hitting many parts of the U.S. economy at once.

To mitigate the supply-and-demand dangers associated with a natural resource-based economy, Reich advocated diversifying the economic base and investing in infrastructure and education.

“The surest resource of a place is the skills of its people and their ability to innovate. Education is the key to the future and the key to a diversified economy,” he said.

Looking forward, AEDC believes that despite global uncertainty and sluggish recovery in the U.S., economic indicators for Anchorage point to slow-but-steady growth in most job fields. Find AEDC's three-year economic outlook for Anchorage, as well as related presentation materials, on its website.

Contact Eric Christopher Adams at eric(at)alaskadispatch.com and Scott Woodham at swoodham(at)alaskadispatch.com