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Alaska GDP declined 2.5 percent last year

Pat Forgey

Alaska's gross domestic product shrank 2.5 percent last year, making it the only state in the nation with a decline during a year of overall economic rebound.

But an Alaska economist cautioned against making too much of any individual state's GDP number -- especially when a state is as small and commodity-driven as Alaska.

"Our numbers jump around a lot, but employment still grows and the economy still grows," said Neil Fried, economist with the Department of Labor and Workforce Development's Research and Analysis Section.

The federal Bureau of Economic Analysis on Wednesday released state-by-state GDP numbers for 2013, with North Dakota, which saw 9.7 percent growth, sitting at the top of the range.

In Alaska, the ranking put the total value of all goods and services produced at $51.5 billion, down from $52.9 billion a year earlier. The decline was a change from the previous two years; Alaska's GDP increased by 4.2 percent in 2011 and by 3.5 percent in 2012. The last decline occurred in 2010, when decreased oil prices contributed to a 1.9 percent drop.

Still, Alaska's total was more than several states, including some with larger populations, such as Maine and Rhode Island. That's because of Alaska's high per-capita GDP -- about $70,000, for every man, woman and child in the state -- is the highest in the nation, the bureau said.

But Fried also advised against getting overly excited about leading the nation in per-capita GDP. That tends to happen in commodity-rich states like Alaska.

Petroleum 25 percent of Alaska GDP

"It's the value of all the goods and services produced in Alaska, but a lot of that doesn't go to Alaskans," he said. "The value of oil and gas produced in Alaska, or the value of all the fish, obviously all of that doesn't come back to Alaska residents."

The profits of companies operating in Alaska are considered part of the state's GDP, whether or not those profits stay in Alaska, Fried wrote recently in an article about how such numbers are calculated.

But GDP numbers do illuminate sectors of the state's economy and their relative importance.

For instance, Alaska's petroleum industry has an outsized impact, accounting for 25 percent of the state's GDP. "Oil does not play as important a role in any other state in the nation," Fried wrote in a 2011 article in his department's Alaska Economic Trends publication.

Much of the decline in Alaska's 2013 GDP number came in the mining segment of the economy, which includes oil and gas. The bureau attributed the GDP decline to declining North Slope production.

Alaska total tops North Dakota

For those concerned about competition with North Dakota, which has surpassed Alaska in oil production, the feds say Alaska's GDP remains larger than North Dakota's, which is $47.8 billion.

But North Dakota's shale-driven oil production continued to climb rapidly, with its GDP growth topping the nation.

In Alaska, Fried said, the government sector makes up a relatively high one-fifth of the state economy. That's due to the large presence of the military and federal civilian workers in Alaska, he said.

Government's share of the GDP declined in Alaska last year, presenting the state's total GDP with a double whammy and contributing to this year's decline.

Highlighting his point about the volatility of Alaska's GDP number, Fried pointed to 2009, when high oil prices caused the state's GDP to soar. Nonetheless, that year came at the height of the national recession and was the first time in 23 years Alaska lost jobs and income.

Sometimes, he said, "Year-to-year changes in Alaska's GDP might say very little about what's happening on the ground level of the state's economy."

Reach Pat Forgey at pat@alaskadispatch.com.


By PAT FORGEY
pat@alaskadispatch.com