2021 Economic Outlook: Uncertainty prevails, yet experts remain positive.

• Author: Barbour, Tracy
• Position: FINANCE

As Alaska was emerging from its longest recession on record, COVID-19 struck and delivered its devastating blow to the economy. The COVID-19 pandemic has impacted almost all the state's industries, severely depressing revenue, employment, and consumer confidence. Now, what's next for Alaska's key industries? What economic forecasts are experts able--or willing--to make for 2021?

In October, the consensus among economists was that Alaska's fate is uncertain. However, there was that ever-present cautious optimism that the state will recover slowly, but surely, from the recession--and the added burden of the pandemic.

Performance of Key Industries

Alaska's recent recession never actually ended, according to Anchorage Economic Development Corporation President and CEO Bill Popp. In the first quarter of 2020, Alaska was in its fifth year of recession and down 800 jobs. Then COVID-19 reared its ugly head and continues to have a chilling effect on many aspects of the state's economy. "The white-collar jobs have not felt the pain as much as the blue-collar jobs," Popp says. "The service sectors have all taken a beating." The pandemic Is having a broad-based Impact, causing a considerable decline in Alaska's overall economic activity. "There is virtually no sector of our economy that is untouched by the pandemic," Popp says. "The only area we're seeing positive news In jobs is the federal government because of the Census."

Even healthcare, which historically has been a rock-solid Industry in Alaska, has been hit unexpectedly hard. Elective procedures have pretty much dried up as hospitals reduced or cancelled elective surgeries, in part, to conserve personal protective equipment. Plus, many people are forgoing optional procedures for fear of contracting COVID-19 In the hospital. These and other factors have led to hospital personnel layoffs, from admin and food prep to janitorial. "We had thirteen years of job growth in healthcare," Popp says. "This is the first drop in the healthcare sector in fifteen years."

In addition, tourism and tourism-adjacent businesses have been hit severely by the pandemic. Alaska's highly seasonal economy typically has 15 percent more jobs in July than it does in January, according to Mouhcine Guettabi, associate professor of economics at UAA's Institute of Social and Economic Research.

And the decline in travel and travel spending, which normally occurs in just three short months, has cost the state thousands of jobs. "As of September 2020, employment in leisure and hospitality is 33 percent below the same month last year," Guettabi says. "The recovery of the sector is dependent on virus containment, financial health of the consumer at the national level, and business failure mitigation efforts. In my forecast, I predict that the leisure and hospitality sector will grow at double-digit rates, but it will still be below pre-pandemic levels."

Manufacturing, specifically seafood processing, was also hit hard by the pandemic. Seafood processing, which represents 70 percent of all manufacturing jobs in the state, has been negatively affected by...