Alaska’s Economic Forecast for 2026

Lower oil prices globally could translate into hesitance to invest in Alaska. Watson says, “At current prices and below, Alaska development will unlikely be favorably assessed.”

Furthermore, even if activity keeps up its tempo, fewer Alaskans are likely to draw paychecks from it. “Like many industries, oil and gas has achieved more operational efficiencies over the last decade or so as it was forced to slim down employment in the face of lower prices. Wells require fewer workers and are drilled in faster than in years past. Horizontal drilling accommodates many wells to a pad. Artificial intelligence [AI] presents new opportunities for this (and every other industry) to do the same,” Watson says.

For whatever reason, the Alaska oil patch is already staring down some personnel cuts. Watson observes, “Conoco[Phillips] has announced global staffing reductions, but it is unclear how this will impact their Alaskan operations. As construction wraps up and production begins at Pikka and Willow, we will likely see a reduction in aggregate indirect employment, as there are no similarly sized projects that are in the pipeline—except the Alaska LNG pipeline, which would likely not be due to break ground next year even if it does receive a favorable final investment decision.”

As of press time, AK LNG developer Glenfarne Group had not made a final investment decision.

Off the Leash

The glow of the AK LNG brass ring, tantalizingly close, inspires optimism in Dan Stickel, chief economist at Alaska Department of Revenue. “The oil and gas industry is generally an area of strength right now,” says Stickel. “Prices are not great, but they are sufficient to allow quality projects to proceed.”

Tangible progress is manifesting this year. “We’re looking forward to seeing production increasing from the Pikka and Willow projects. These two major fields are really driving activity on the Slope,” Stickel says. “We’re seeing robust exploration activity and continued plans for a very busy season up on the Slope into 2026. The less restrictive policies from the federal government have led to some optimism regarding opportunities for more exploration and development.”

Those federal policies are encapsulated in Executive Order 14153, “Unleashing Alaska’s Extraordinary Resource Potential,” signed by Donald Trump on January 20, 2025, within hours of starting his second term as US president. The order directs federal agencies to prioritize the AK LNG project. It also led to a direct presidential order in October to authorize the Ambler Access Project, a proposed 211-mile industrial road connecting the Dalton Highway to the mineral district about 100 miles east of Kotzebue.

Both orders buoyed the mood of the annual conference of the Resource Development Council for Alaska (RDC) in November. Shortly before her departure as RDC executive director, Leila Kimbrell noted, “It is a welcome message to see the law applied approving access to resources that can be responsibly developed and are important to both our state and our nation. Moving this project forward means jobs for Alaskans, strength for our economy, and new opportunities for our rural communities, as well as a stronger supply of critical minerals America needs. Alaska is ready to do our part for the national economic and energy security needs.”

Consequential Hurdles

Cheers for a turnaround in federal policy are tempered by the consequences of other presidential actions. “Tariffs are definitely impacting operations,” says Logan of market uncertainty. “We’re hoping to see some resolve in the coming months.”

Beyond rippling through global oil markets, import taxes (and ongoing legal disputes imperiling their permanence) are affecting employees’ pocketbooks. For the oil industry, that means higher payroll costs. “The only way to attract people to the North Slope to work shifts like two weeks on, two weeks off is with money,” says Logan. “If the pay is significant, it will work.”

While the healthcare sector has seen strong employment growth, it must overcome federal policy hurdles too. “Changes to federal health policy under the recent One Big Beautiful Bill Act, particularly around Medicaid eligibility, may be consequential for Alaska’s healthcare sector given the state’s reliance on Medicaid—we are fifth overall for Medicaid enrollment (as a percentage of population) across all states,” says UAA research assistant professor of applied economics Brock Wilson. “However, policy carve-outs and the Rural Health Transformation Program complicate the picture, as they moderate the net effects.”

Over the last decade, healthcare has been the primary driver of employment growth in Alaska. This is driven by demographic change (an aging population), federal policy, and state policy (e.g. Medicaid expansion). While the Alaska population aged 65 and above is projected to continue growing over the next ten years, federal policy regarding healthcare remains highly uncertain.

Decline, not Collapse

Fear that federal immigration policy might sour the summer tourism season turned out to be exaggerated. Although nationwide border crossings from Canada into the United States between May and August dropped by 24 percent compared to a year earlier, Skagway and Haines saw smaller decreases of 4 percent and 16 percent, respectively, in visits from their international neighbors. Those lower numbers came as a relief to merchants anticipating a full-on boycott, and tourism-dependent communities head into 2026 with more realistic expectations.

However, “There have been reports of a drop-off in independent tourism generally. Part of that is due to reductions in foreign visitors. We’ve noticed this in the reduction of vehicle rental tax receipts,” says Stickel.

Watson adds, “The 2025 summer season saw what I understand to be roughly flat numbers from the year prior. Favorable US-foreign exchange rates traded against immigration policy in the international market, while economic uncertainty in the rest of the United States led to reduced travel for many families.”

Both economists see reasons to anticipate a normal tourist season. “Alaska travel tends to be booked in the winter ahead of the coming summer season, and I heard few indications of widespread cancellations,” says Watson.

And Stickel notes, “Cruise ships plan their schedules several years in advance and there’s strong incentives to fill the cabins, so we expect the number of cruise ship passengers to remain fairly steady.”

Fishing seasons have had a rough go lately, but hope is on the horizon. “We’ve seen signs of recovery in the fisheries industry since 2023, which was a very challenging year, followed by 2024, which was even worse in terms of total value in the industry,” says Stickel. “It looks like we did see a little bit of recovery in 2025, and our forecast is that there will be continued slow recovery within the fisheries industry.”

However, “Preliminary pre-season forecast for Bristol Bay estimates 45 million sockeye for next year. That’s a little lower than last year’s run and the ten-year average. Processors continue to face significant cost headwinds,” says Watson. “Alaska has seen the closure of several major facilities in recent years, which have had a substantial impact on the communities where those closures have occurred.”

Once the industry turns the corner, Stickel says, “It might take a long time to get back to where we were before the crash in 2023, but I know we’re moving in the right direction.”

Balancing Benefits

Compared to 2025, in which the country adjusted to a new presidential administration, the outlook for 2026 should be relatively stable. Yet several federal actions will continue to shape Alaska’s economy in the near term.

“The federal budget environment signals slower discretionary spending growth. This may mean lower growth in federal agency operating budgets and hiring in the medium term,” explains Wilson. Recent federal workforce directives hint at reductions in force in Alaska, but the magnitude of these reductions has not been identified yet. Overall, federal policy suggests a more modest federal spending outlook beyond 2025.

As in any year, some sectors are expected to experience strong growth in 2026, while others will remain uncertain. Balancing both sides is key to achieving goals for Alaska’s economy.

“You know, I’m really excited about the pro-growth agenda that is being advanced by the federal and state administrations. If some of these big projects become a reality, or even the myriad other efforts proposed around the state, it could make a real difference in Alaska’s economy and in the condition of communities,” says Andreassen. “The trick, in my mind, is to make sure that revenues from this development are sufficient to make the necessary investments in our future—education, housing, infrastructure.”

Andreassen cautions that those investments should be spread statewide, even though the bonanza projects are highly localized. “Ensure that benefits are spread evenly across the state, so that we don’t leave some communities behind,” he says. “Working together toward these goals will be critical.”