Fried marvels at Valley’s steadiness, even with state in ‘recession’

WASILLA — Bubbly, colorful and bow-tied as ever, preeminent Alaska state economist Neal Fried told a packed dining hall at Tuesday’s Greater Wasilla Area Chamber of Commerce meeting that while the state’s economic future is less than favorable, the Mat-Su Valley’s economy remains steady for the foreseeable future.

It’s a trend Fried considered “kind of amazing.”

With job losses the standard throughout the state, the Mat-Su Valley gained 2 percent employment in 2016, Fried said in his presentation. As surprisingly, those figures came without the benefit of any net job gains in hospital employees, while social assistance employees rose by 185, leisure and hospitality increased by 133 and government, mainly public school, increased by 131.

But, Fried warned, Mat-Su residents should feel in any way protected from the storm brewing around them.

“Honestly, you can’t look at the Valley economy or the Anchorage economy by itself and get a good feeling for what the economy is going to do,” he said. “You’ve got to look at them combined.”

Fried noted that the percentage of people who live and work in the Mat-Su Valley has remained at the 56 percent clip is has more or less sustained for decades, even through the oil boom of recent years.

Fried’s data said that in 2015, even as oil prices were beginning to fall, 3,449 Mat-Su residents worked on the North Slope, bringing in $281 million to the local community.

He said the loss of some 3,000 jobs in Prudhoe Bay is bound to affect the Valley in some way, he just hasn’t seen what that way is yet.

“The oil industry has faced losses five times since statehood, and yet (except for the 1980s), the Alaska economy continued to grow,” Fried said before declaring the state to be in its first recession in its history.

What makes Alaska’s economic state quandary even harder to assess is the health of the nation’s economy as a whole.

“America’s (workforce) is about as good as it’s been in history,” Fried said, noting that the Mat-Su’s unemployment rate of 8.3 to 8.4 percent is remarkably consistent with its 10-year average. “That’s disproportionate, and it may be that some people are leaving (the state). But the American job market is red-hot right now.”

Fried also offered up a prediction of the impact taxation on commercial marijuana would have on state finances.

Titling his slide ‘Marijuana is not going to bail out the economy’, Fried projected that the industry would create between 700-1,400 direct jobs, 300-600 indirect jobs, for a total of between 1,000-2,000.

“The state is going to get very little tax,” Fried said. “They had estimated about $5 million this year (in tax revenue) and that appears already too high. But there are some supply problems, so we’ll have to see.”

Fried predicted another strong tourism season for the Valley and state as a whole, especially with the American economy picking up.

“That’s a real positive right now,” he said. “We know we’re going to have another good visitors’ season. America’s doing well and people are going to want to travel.”

Touching on real estate, Fried said the Alaska market doesn’t show any of the signs of a bubble that burst so memorably in the 1980s. That steadiness has helped the state reduce the state’s high cost of living discrepancy with the rest of the country.

“Alaska is about 30 percent (higher than the national average),” he said. “The Valley comes in at probably about 20 to 25 percent and when you take into account (the lack) of a tax burden, that improves it even more. For years, we were always the highest in the nation, but now there’s lots more expensive places than urban Alaska.”