Alaska close to recession, if not there already, economist says

State jobs and population numbers show Alaska may be on the cusp of an economic recession or already in one, a University of Alaska Anchorage economist said Friday.

Gunnar Knapp, director of UAA's Institute of Social and Economic Research, told a demographics forum in Palmer the state is "probably already in or entering into at least a mild recession."

Knapp's assessment was based on two straight months of declining employment. He also factored in the state's first population drop since a major recession in 1987-88, and a $1.9 billion cut in state capital spending over the past three years.

Nonseasonally adjusted employment data from the state Department of Labor and Workforce Development showed a loss of 1,600 jobs statewide in August compared to the same month last year and 800 in September.

Those losses are very mild, less than 1 percent each month and well within the margin of error, but are worrisome because consecutive monthly job losses occur infrequently in the data set, according to Jonathan King, principal and senior economist at the Anchorage-based consulting firm Northern Economics.

"Are we there yet? I don't know, but if we get another month of negative (year-on-year decline) then this will be the first time we have had three in a row since July 2009, which was the last time we were in a recession," King said in an email.

The 2009 recession in Alaska was a mild one and the forces that slowed the economy six years ago are vastly different from those in play today. In 2009, the global financial crisis was the main reason for the economic dip in Alaska. Still, the state was largely insulated from the nation's worst economic meltdown since the Great Depression.


Today the situation is reversed. The nation as a whole is recovering, but Alaska's outlook is less promising. Prices for oil and other commodities are low and not projected to recover anytime soon, necessitating state budget cuts and threatening large job losses both in and beyond the oil patch. Other unknowns include the level of military cuts, continuation of work on the Alaska LNG project and whether the state handles its fiscal issues to the satisfaction of investors.

Because there is no set definition for what exactly constitutes a recession, the existence of one, especially when the numbers appear weak, can be up for debate. State labor economist Neal Fried is not convinced the "R" word describes Alaska's economy.

"I think the current numbers, based on the way I would define that term, are not showing that," Fried said.

And even Knapp felt compelled to offer qualifying statements after his talk hosted by the Mat-Su Borough School District in Palmer.

"I'd emphasize that the statement was not intended as a deep or formal pronouncement based on extensive research," he said in an email. "It is rather our judgment of the situation based on all the available evidence to us."

There is agreement that Anchorage is not in recession. Unlike Alaska as a whole, the state's largest city has posted improving jobs numbers throughout 2015. Southeast Alaska, however, has posted noticeable job losses, likely the result of government cuts.

"We ought to be looking at Alaska as a collection of regional economies," Knapp said. "The rates of growth and decline are different in different parts of the state."

Jeannette Lee Falsey reported from Anchorage and Zaz Hollander from Palmer.

Jeannette Lee Falsey

Jeannette Lee Falsey is a former reporter for Alaska Dispatch News. She left the ADN in 2017.

Zaz Hollander

Zaz Hollander is a veteran journalist based in the Mat-Su and is currently an ADN local news editor and reporter. She covers breaking news, the Mat-Su region, aviation and general assignments. Contact her at