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Late '80s indicators spell relief.

Late '80s indicators spell relief

Here's the scene: It's a gloomy view at twilight across the Cook Inlet. Mist covers the glaciated terrain. An arm is rising out of the water (very Kinky) holding a laser-lit book. The cover shines with encrusted oil, old fish hooks and a "Sheffield for Governor" sticker. Suddenly, an erie voice booms out across the quiet landscape, "They're bah-ack!"

A new horror movie? No, something more thrilling. Positive figures on the Alaskan economy.

It's a fact. By year-end 1990, if growth continues at levels experienced last year, employment in the 49th state will stand at 236,000 - an all-time high by Alaskan standards. So far, conditions look good for at least this performance, with growth rates for the first quarter running far above those of 1989.

With the benefit of hindsight, the Alaskan performance over the 1980s stands out quite clearly. First came the post-pipeline expansion, then the oilprice crash. This was followed by a dismal two-year period during which the economy simply sat and licked past wounds.

For the state as a whole, paralysis ended in March of 1988. That was the month in which, for the first time in two and a half years, employment levels were higher than the same month the previous year. Since then, the economy has continued to grow at a surprisingly respectable rate.

On an annual basis, the worst performance was clearly in 1986: State employment contracted 5.5 percent - from an '85 high of 231,000 to 218,000. By 1987, at the nadir of the oil recession, employment had fallen to an average level of only 208,000-a job loss of 23,000 people.

Recovery since 1987 has been quite gratifying, especially so for those of us who felt all along that Alaska in the mid-1980s had matured to more than the level of a "one-crop" Middle-Eastern province of the Lower 48.

While energy prices may have knocked the props from the growth spurt of the early '80s, Alaska has returned to prosperity despite a rather lackluster performance in the value of the state's primary resource. Instead, expansion has been due to such diversified activities as fishing, mining and, above all, tourism. Each of these industries has contributed to an expansion substantially stronger than that in the United States as a whole during 1989 and the first quarter of 1990.

For example, the state as a whole grew more than 5 percent last year. In contrast, national expansion was on the order of 3 percent. Because much of Alaska's recent growth has come in non-oil areas, the possibility that energy-related spending in the state may once again be on the increase - for example, due to pipeline replacement programs and environmental expenditures - should be seen more as an "icing on the cake" than as a necessary factor in maintaining economic momentum.

Statistics for Alaska's most populous economic base, Anchorage, tell a similar story, albeit with a bit of a lag. Largely as the result of a massive real estate overhang, the oil recession in Anchorage was far deeper than that in Alaska as a whole.

Looking back, the municipality went farther into the soup than other regions in 1987 and pulled out only marginally in 1988. In 1985, almost exactly half of all Alaskan workers - 114,000 - resided in the Anchorage area. By the end of 1988, Anchorage employment was down to only 99,000 and represented only 46 percent of the state total. In 1989, however, the city grew more rapidly than the state as a whole.

While part of these gains were due to oil-spill cleanup, this recovery is more than disaster related. Exxon sharply curtailed spending in the fall, while strong employment growth continued into the spring.

Anchorage will not employ as many people in 1990 as it did at the peak of its job prominence in 1985. But the recovery is now solid, and the outlook for balanced growth quite good.
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Title Annotation:The Economy According to Safir
Author:Safir, Andrew
Publication:Alaska Business Monthly
Article Type:column
Date:Jun 1, 1990
Words:658
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