Comparing 80's recession in Alaska with economic challenges facing state today

    JUNEAU, Alaska (KINY) - An article in the September edition of Alaska Economic Trends published by the Research and Analysis Unit of the State Department of Labor and Workforce Development was highlighted on Action Line this week.

    The article by economist Caroline Schultz looked at similarities and differences between the recession in Alaska during the 1980's and the economic challenges facing the state today.

    She said of the key similarities.

    "The foundations of Alaska's economy have essentially not changed. Oil, and then, of course, the trickle down and trickle out effect of the oil industry, in terms of the support service jobs it creates and the state and local government it ends up funding, are still fundamentally the most important, along with the federal government. Those two - federal and oil - kind of remain the bedrock of our economy. That was true in the 1980's, and it's true now.

    Schultz said of one big difference:

    "Alaskans look a lot different. We have a much different relationship with the state. In migration in the early 1980's and late 1970's following the oil pipeline construction era, in migration was extremely high. The population was much younger; a much larger percentage of the population were in their 20's, and their roots in the state were a lot shallower. If you think of those people, the ones that stayed and toughed out the 80's recession, those people are older, and they have children and grandchildren in the state. That may affect what happens, because what we saw in the 80's was a serious out migration of people.

    Another big difference was the housing market:

    "We were really in the middle of a bubble in the 1980's. I think in retrospect it's very easy to identify that it was especially a housing and real estate bubble that, of course, burst. We had record breaking foreclosure rates, empty houses, people dropping their keys off at the banks, and banks were failing. It was kind of part of a national bank failure, but then also, Alaska had the highest bank failure rate of any state in the country. The finance industry here in Alaska is a lot more stable compared to how it was in the 1980's."

    Schultz says the third part of the series will deal with the recovery from the 80's recession.

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