Alaska’s economic landscape has shown troubling stagnation over the past decade, with the state’s gross domestic product (GDP) growing at an average rate of only 0.4% annually from 2015 to 2025, adjusted for inflation.
According to a recent analysis from the Department of Labor and Workforce Development, only North Dakota has experienced slower growth during this time, averaging just 0.2% per year.
In stark contrast, the national average annual growth rate during the same period was 2.1%, with a median growth rate of 1.7%.
Without considering inflation, Alaska’s growth appears more impressive, boasting an average increase of 8.2% from 2020 to 2024.
However, this nominal rate is misrepresentative and highlights the volatile inflationary environment affecting the state’s economy.
The report emphasizes the importance of examining “real” GDP, which accounts for inflation, revealing that Alaska’s total GDP peaked over a decade ago when oil prices surged.
Between 2015 and 2024, Alaska only recorded real GDP growth in three specific years—2017, 2021, and 2022—which coincidentally were the only years the state surpassed national averages in growth.
Sam Tappen, the state economist responsible for the analysis, expressed concern regarding the long-term stagnation of Alaska’s economy.
Tappen noted, “The fact that we’ve had such long-term stagnation, I think, is troubling.”
This stagnation is closely linked to Alaska’s heavy reliance on oil, and the prices associated with it, significantly impacted by global markets and events beyond the state’s control.
The fluctuations in oil prices heavily influence Alaska’s economic performance, as observed during periods of both high and low prices.
For instance, Alaska’s GDP dropped by 9% in 2015 due to plummeting oil prices, and in 2020, the state’s real GDP fell 7.1% as a result of the global COVID-19 pandemic.
Interestingly, states like North Dakota, Wyoming, and Louisiana, which also rank low in economic growth, share similar reliance on oil and gas.
Despite the challenges posed by the oil-dependent economy, the statistics do shed light on some positive trends.
Excluding the mining sector dominated by oil operations, other segments of Alaska’s economy have seen growth.
“All the other industries are typically growing pretty steadily,” Tappen explained, highlighting the positive trajectory in various sectors.
The transportation and warehousing sector, for example, contributes over 14% to Alaska’s GDP and has been among the highest in real growth, though it remains closely tied to the oil industry, with over half of its output relying on oil activities.
Additionally, industries like leisure and hospitality, construction, private health, and education have also recorded notable annual growth around 3%.
In contrast, the mining sector, particularly driven by oil, has seen a decline, averaging a 2.6% annual decrease, while the natural resources sector, including seafood harvesting, has declined even more sharply at an average of 3.9% per year.
However, it is essential to note that gross domestic product is only one metric of economic health, as noted in Tappen’s article, where employment and income also play significant roles in evaluating Alaska’s overall economic condition.
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