Alaska’s Economy: An Update

Some of WC’s readers were pretty unhappy when WC predicted the state legislature was going to put Alaska into a recession. Even more were unhappy when WC announced it had happened.

So WC expects to piss off still more of his readers by reporting that the recession is deepening. Job growth has tanked.


It’s a recession when there is a 1.5-2.0 percentage points rise in unemployment within 12 months. Alaska is about to enjoy – for a given definition of “enjoy” – a second year of recession.

The largest single point of job loss is government employment, and in that sector it’s state government has had the largest shrinkage.


The Republicans in the state legislature have been making a lot of noise about “right-sizing” the state government. That’s politician-speak for firing a bunch of people. The problem is that those people spend their wages at stores, and when they don’t have jobs they can’t spend money. So retailers have to lay people off, for example. And then those lost wages aren’t buying goods and services, so there are more layoffs. The Democrats are right: you cannot cut your way to prosperity.

What you can do is give Alaska the highest unemployment rate in the nation. Which is what the Alaska Legislature has done.

The Alaska Department of Labor, in its January 2017 jobs report, said:

The main uncertainty about Alaska’s economic future has less to do with oil prices, which are influenced by factors well beyond the state’s control, and more to do with poli􏰁cal decisions on the size and funding source of state government.


Which makes it easy for WC to make an economic forecast: It’s going to get worse before it gets better.