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Alaska's Economy - 10/20/14

Many of the most rapidly expanding state economies are those that are rich in natural resources.  Look at a list of the states with the lowest rates of unemployment, and it will include North Dakota, Nebraska, Texas, Colorado and several other states that produce oil, natural gas, and/or other natural resource-derived products.  Given that, one might think that Alaska’s economy would be booming.  It’s not.

These days, Alaska is producing and shipping less natural gas because of growing production in the lower-48 states.  It’s also pumping less oil from aging wells in Prudhoe Bay on the state’s north slope, which has led to job losses and diminished tax revenues.  In 2012, North Dakota surpassed Alaska in crude oil production. 

At the same time, federal spending is not expanding today as it had in the past, and Alaska has long relied heavily upon those dollars.  For instance, as reported in the New York Times, the total number of active duty military personnel has declined by roughly 1,500 since 2009.  As a result of these various pressures, Alaska was the only state where both the total number of nonfarm jobs and gross state output declined last year.

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.