2023 Alaska Economic Forecast: Ready for recovery, dragged by workforce woes.

• Author: Pesznecker, Katie

As Alaska continues climbing out from the COVID-19 pandemic, the state's economy remains among the nation's lowest performing, yet other indicators suggest potential for growth and recovery in 2023 and beyond.

While nearly half of other states have rebounded, Alaska is still reaching for pre-pandemic job levels, according to the October 2022 Alaska Economic Trends report published by the Alaska State Department of Labor and Workforce Development Furthermore, a study published in November 2022 by the Alaska Center for Economic Development at UAA made a case that, for the last seven years, Alaska's economy ranked "at or near the bottom" in key economic health measures compared to its national counterparts.

A major reason Alaska has continued to struggle is that, before the pandemic hit, the state was already in recovery mode, having barely come out of a three-to-four-year recession, says Neal Fried, an economist with the State of Alaska.

"Pre-COVID, the American economy was red hot, and had a lot of energy or momentum, and nationally that momentum has sort of picked up again, in a big way," Fried says. "We didn't have any momentum when we went into COVID, and we still don't. We're lagging. The last time we looked, as far as recovery back to even pre-COVID days, we're 47th in the country."

This has happened before, Fried says: Alaska's economy suffered and the state lost workforce numbers "when the American economy was red hot and ours wasn't. It's not necessarily counter cyclical, but it does make things here slower."

Where Are the Workers?

Many economic watchdogs point to workforce woes as a foundational problem to turning things around in Alaska. With "help wanted" signs peppering shop windows and unemployment numbers among the lowest nationally, Alaskans continue to ponder: where are the potential workers?

A primary misconception rooted in the pandemic's early days was that people were simply choosing not to work. Critics painted pictures of individuals skipping job interviews for video games and stimulus checks.

That's simply not true, Fried says. What is true is that fewer people are moving to Alaska, shrinking the labor pool.

"It's not that everyone's getting in their U-Hauls and heading down the highway," Fried says "What's really happened--and this has happened before, just not to the extreme--is because the national economy is doing so well for the last decade and even today, people don't move. They're going to stay close to where they are. As long as that condition exists, it's going to be more difficult for Alaska to attract...