My Sept. 12 column described just how hard it is to get a grip on where the Alaska economy is and where it is going. The fundamental problem highlighted there was that 2009 preliminary employment numbers showed significantly more job growth than has proven to be the case. Because we are so dependent on somewhat error-prone preliminary data, it might be nice to let people know where the best data tells us Alaska has been going for the past decade or so.
The best data come out with a relatively long time lag. To get even a modestly complete picture we are stuck with 2008 as the most recent period through which we have something like enough information.
GDP GROWTH
The United States has had a relatively sluggish 10 or 11 years. Alaska has had an even more sluggish 10 or 11 years.
Economists bemoan the tepid 2.9 percent annual average growth in real (inflation-adjusted) gross domestic product, or GDP, posted by the U.S. economy between 1997 and 2008. But that tepid rate of growth positively laps the 0.6 percent rate posted by the Alaska economy over the same period.
Nationally, it takes something like a 2 percent rate of GDP growth just to keep the unemployment rate from rising. At Alaska's 0.6 percent 1997-2008 rate of GDP growth, the national unemployment rate would climb in perpetuity were it not for the fact that under those conditions an army of once-employed persons would cease looking for work and would cease being counted among the unemployed.
Alaska's relative position is just as bad when we look at per capita growth rates. Between 1997 and 2008, U.S. per capita GDP grew at about 1.2 percent per year. In sharp contrast, Alaska per capita GDP fell at a rate of 0.5 percent per year.
PER CAPITA INCOME
It might seem somewhat counter-intuitive, given Alaska's slower rate of GDP growth, but Alaska's inflation-adjusted per capita personal income rose slightly faster than the U.S. average over the 1997-2008 period.
Alaska posted a 1.8 percent annual average gain vs. the U.S. average of only 1.5 percent.
But that is something of a statistical artifact. If we remove the extra $1,200 the state added to Permanent Fund dividends paid to Alaskans in 2008, the 1997-2008 average for Alaska drops below that of the United States as a whole.
OIL and GAS
Alaska's primary economic engine is oil and gas production and development. Most of the stimulus is funneled through state and local government and the Permanent Fund.
But adjusted for inflation, Alaska state and local government payrolls grew only 0.3 percent per year between 1997 and 2008.
Although Permanent Fund dividends, apart from the extra $1,200 received in 2008, grew 1.6 percent per year over that period, in the last two years the dividend has fallen dramatically -- from $ 2,069 in 2008 (not counting the special $1,200 bonus) to $1,305 in 2009 and $1,281 in 2010.
By way of further comparison, the $1,281 dividend in 2010 is worth only $943 when stated in 1997 dollars. The 1997 dividend was $1,297.
UNEMPLOYMENT
A companion piece of misleading economic information is Alaska's unemployment rate. One would think that Alaska's low rate of growth of inflation-adjusted GDP would produce a startling high and rising unemployment rate and, in truth, it has risen dramatically in 2009 and 2010.
But from 1997 through 2008 it showed no longer term tendency to rise, oscillating from just above 6 percent to just below 8 percent.
Partly that happened because discouraged workers drop out of the labor force and are therefore not counted as unemployed. But it also might be that the unemployment data are just wrong, based as they are on a household survey rather than hard numbers.
David M. Reaume holds a doctoral degree in economics. He lived and worked in Alaska for 22 years before moving to Washington state in 1999. His opinion column appears every month in the Anchorage Daily News.
DAVID REAUME
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