In the economic hurricane brewing the state, economists see the Kenai Peninsula as a relatively safe port in the storm.
The prevalent message at this year’s Industry Outlook Forum so far has been, good news, bad news.
The two-day event, put on by the Kenai Peninsula Economic Development District, brings together speakers representing various sectors of the Kenai Peninsula’s economy.
Alyssa Rodrigues, economist with the Alaska Department of Labor and Workforce Development, kicked things off Thursday morning. With her statewide perspective she called herself a bit of a Debbie Downer, as state government faces a fiscal crises in the billions of dollars. But she had happier news for the peninsula.
“So, the Kenai Peninsula typically outperforms the state. And it moves with the state, so when the state sees rough times, the peninsula typically does, as well, but it doesn’t seem to be impacted as badly as the state,” she said.
The jobs outlook for the state forecasts a decline of 0.7 percent in 2016, which isn’t rosy, Rodrigues says, but less than a percentage point isn’t terrible, either. The peninsula is looking at even less of a jobs decline of .4 percent.
When oil prices last took a dive, in the 1980s and the state plunged into a recession, the peninsula declined, as well, but has since seen more growth than the state. That could be a good thing, or a not-so-good thing.
“The question then is, is the Kenai going to do better because of all that growth that happened, or is it just that much further to fall?” Rodrigues said.
Looking at the first part of 2015, job losses on the Kenai Peninsula came mostly in oil and gas and construction, whereas jobs were created in leisure and hospitality — meaning, tourism — retail and manufacturing — which includes fishing. Rodrigues expects those trends to continue in 2016. She estimates a net job loss for the peninsula of .5 to .8 percent.
One of the factors cushioning the peninsula from fiscal downturns is diversity in its economy.
“The Kenai is awesome in that it has a lot of different earning potentials in the borough,” Rodrigues said. “And seafood’s one of them. So this is a big question mark as to how much this particular industry can help in compensating for other losses in the borough.”
The peninsula continued to stack up well against the rest of the state in terms of cost of living, housing costs, high school graduation rates and population growth.
Barbara Sheinberg contracted with the Kenai Peninsula Economic Development District to update the borough’s Situations and Prospects document, which provides an economic snapshot of the borough. She said that the peninsula has a lot going for it, including a diversified economy, recreational opportunities, workforce training, a well-developed infrastructure, good schools and an industry-friendly environment.
As in the rest of the state, some sectors are declining. In the first part of 2015, Sheinberg said, oil and gas on the peninsula lost 50 jobs, and construction lost 60, But there is growth, too.
“Tourism is booming. Tourism businesses had their best year ever in 2015, and that is a real bright spot,” Sheinberg said.
The residential property market also saw its best year in 2015.
“Don’t forget that every time a house sells somebody is then buying furniture and hiring the moving company and going to the hardware store and painting and so that’s really an important part of the economy.” Steinberg said.
The health care sector continues to grow on the peninsula, particularly as the population continues to age. Maritime activity, including fishing, shows possibility for growth, as well.
Thought economists are clear that there is an economic storm blowing ashore in Alaska, the Kenai Peninsula seems to be a relatively snug spot to ride it out.