Kes Woodward still recalls, with some amazement, selling every single painting in his first solo show. A Los Angeles-based art buyer for oil company ARCO was there. Miffed that Woodward had already sold a few of his expressionist renderings of the boreal forest, she told him she would purchase the rest on the company's behalf.
The year was 1983 and Alaska was in the midst of its last great economic boom. Oil was flowing down the 6-year-old pipeline from the North Slope to Valdez at greater volumes every year, creating a heady atmosphere in which cash flowed just as freely and optimism radiated from all major sectors of the economy: oil, government, real estate, construction and finance.
"I don't want it to sound like I was singled out or extraordinary," Woodward said in an interview more than 30 years later. "I tell that story because it's a window into what a crazy, wonderful time it was."
Few had any inkling that within three years, low oil prices would drag the state into what would come to be known as the "Great Alaska Recession." For those who lived through it, it's hard to ignore the memories of blocks of foreclosed homes and vacant malls.
More than two decades of slow but steady growth separate Alaska from the doldrums of 1986-88, but with oil prices down and no rebound in sight, a flat economy and a more than $3 billion state spending deficit, is Alaska headed for a repeat, or worse?
The consensus is that there is no consensus. There are clear differences between the economic situation today and the lead-up to the Great Alaska Recession, but what those differences mean for the future, no one can say with certainty.
On the upside, there is no outsized economic boom distorting the economy and distracting Alaskans from the potential perils ahead. And the tens of billions of dollars Alaska has in savings today give lawmakers more options than their predecessors had for steering the state away from recession.
On the downside, the state is still yoked to oil, a commodity whose global price drives the economy to erratic highs and lows and whose supplies on the North Slope have steadily decreased for more than 25 years.
In the 1980s economy, a rapid rise followed by free fall
Woodward uses the word "halcyon" to describe that period, when oil companies, banks, Alaska Native corporations and law firms were buying fine art to decorate the lobbies and upper floors of newly built office buildings.
The biggest residential real estate bubble in state history was forming. More than 36,000 homes were built in urban Alaska between 1980 and 1985, but the dramatic increase in housing supply did not dampen prices. Fueled by speculation and a booming population, the cost of a home jumped more than 50 percent during that period, according to the state Department of Labor.
Not even interest rates, which were so high as to be unimaginable today -- peaking above 17 percent in 1981 -- discouraged buyers. And the state helped the bubble grow by spending a hefty amount on programs that reduced those rates for Alaskans and also eliminated income requirements for mortgages, enabling more people to enter the housing market and buy beyond their means.
"Government grew by leaps and bounds. The population expanded a lot in Anchorage and Fairbanks. Looking back, we went too fast," said Bill Sheffield, who was Alaska governor from 1982 to 1986. "The boom had started, and we got overextended."
With the job market growing rapidly, Alaska's population burgeoned by 36 percent, or 125,000 people, during the first half of the 1980s.
The public sector was just as vibrant. Oil revenues doubled the state budget from $1.6 billion in 1980 to $3.4 billion in 1981. Lawmakers were not focused on saving. Rather, they were pouring that money back into the economy for all sorts of reasons, including massive public works known collectively as Project 80s.
Along with Loussac Library, Sullivan Arena and Egan Center, Project 80s built the Alaska Center for the Performing Arts and financed a huge expansion of the Anchorage Museum.
In a recent report titled "The '80's Recession: Are we in a similar position today?" state labor economist Caroline Schultz called the early 1980s "the most dynamic five-year expansion in Alaska's history."
But the huge boom led to a huge bust. Even before oil prices plunged, the bubble market was beginning to deflate. Housing foreclosures were accelerating, and construction jobs were falling.
"In retrospect, it's easy to see that the helter-skelter growth was built on a shaky foundation," Schultz wrote.
The fragility of an economy so dependent on one resource might seem obvious in hindsight, but the crash came as a surprise to nearly everyone. Without substantial savings to draw upon, lawmakers had no choice but to make drastic spending cuts in a short period of time. Those cuts radiated through the economy, taking down the job and housing markets, finance and the arts.
As documented by Schultz, Alaska lost more than 20,000 jobs from 1985 to 1987. More than 40 percent of its banks failed. The housing market collapsed. By the end of 1987, Anchorage had 14,000 empty homes. By the end of the decade, more than 30,000 foreclosures had been filed. In the last half of the 1980s, 44,000 more people left Alaska than moved in.
Harry Brelsford, who moved to Alaska with his family in 1971, left for graduate school during the boom years when, he recalled, "you could smell the money." He returned in mid-1986 to a state where "everybody was doing what it took to survive."
"It was traumatic. A large segment of the population had left, and it was noticeable," he said. "Up in the Matanuska Valley, we had a family cabin for many years. I remember going through the neighborhood and house after house after house was locked and empty."
There was one bright spot. Oil prices may have been low, but production was at its height. In the peak period of late 1988, more than 2 million barrels a day were moving through the pipeline, four times greater than the average daily volume in 2014.
Growth is low and slow in Alaska's economy today
Thirty years later, oil is still a dominant economic driver, accounting for between 80 and 90 percent of the state's unrestricted general fund revenues. In terms of direct jobs, it accounted for about 4 percent of employment in August, but economist Scott Goldsmith estimates about one-third of jobs, including retail and construction, exist because of the industry's presence.
The oil outlook is more sober than it once was, not just because of low prices but because after peaking in 1988 the flow through the pipeline began a long decline that continues today. But the state has substantial savings of tens of billions of dollars, which give lawmakers far more control over the severity of a downturn in the next few years.
"Today things are different. We're on the downside of Prudhoe Bay, but the positive is that we have the Permanent Fund instead," said Goldsmith, professor emeritus of economics at the University of Alaska Anchorage Institute of Social and Economic Research. "That can carry us into the future if we're careful in how we adjust to the post-Prudhoe Bay era."
The economy is also larger, with a track record of low, stable growth in jobs, housing and population dating to the early 1990s. State government spending per person, when adjusted for inflation, has been generally lower than it was in the early 1980s.
But whether Alaska's mellower economy and fiscal climates make the state more or less prone to a bad recession may be clear only in retrospect.
"We're still not sure if it's better, worse or just different," said state labor economist Neal Fried. "It's too early to tell."
There is also more of a sense of foreboding today about Alaska's economic future. More people have longtime roots here and the population on average is older. Because so many lived through the recession 30 years ago, there's more awareness of the potential for a repeat. Talk of a recession is rife at business luncheons, in politicians' speeches and in casual conversations among friends and neighbors.
"When the crash hit in 1986, it just happened to us," Fried said. "Unlike today, people didn't sit around and discuss beforehand what's going to happen. That makes it so much different."
Alaska Dispatch Publishing