Mary Daly on Why Alaska Is a Leading Indicator for the US Economy

SPEAKER_2 (0:02)

Bloomberg Audio Studios, podcasts, radio, news.

Tracy Alloway (0:18)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:21)

And I'm Joe Weisenthal.

Tracy Alloway (0:23)

Joe, I don't know about you, but when I think about Alaska, I think about snow, glaciers, gold, oil, pipelines, northern exposure, small plains, and the 12th District of the Federal Reserve System of Banks.

Joe Weisenthal (0:40)

That's literally the exact list that I think, in that precise order.

Tracy Alloway (0:45)

What a coincidence. I can't believe it. Well, we are in fact here in Alaska, in Anchorage, to be specific, and it's a really interesting time to be taking a field trip to the very, very northern state because Alaska actually has a lot of relevance to our current period.

Joe Weisenthal (1:03)

You used to talk about how Arizona was a very odd lot. I still think, but this is a very odd lot state because there are so many specific things that we hear about here, whether it's a demographic shift, oil, obviously.

Tracy Alloway (1:17)

Logistics.

Joe Weisenthal (1:17)

Logistics is huge. You just feel the presence of the various train and plane hubs and ship hubs here in Alaska. Housing, which has a very difficult housing environment here too. It is a very meaty area for us to do coverage.

Tracy Alloway (1:33)

Absolutely. We do in fact have the perfect guests to talk all about it. We are going to be speaking with Mary Daly. She is of course the San Francisco Fed President and therefore the President of the 12th District and Alaska is in that district and she's here on a trip and she's going to talk to us for quite a while. So Mary, welcome to the show.

Mary Daly (1:52)

Thank you so much. I'm delighted to be here and I'm so delighted that we're in Alaska together.

Tracy Alloway (1:56)

I was going to ask, how often do you actually come here?

Mary Daly (1:58)

I come regularly, but it's not just me. Members of my team, economists, our engagement officers, our public engagement officers, they come too. Ultimately, we're trying to source information from all of our states. So we go to all the states in our district, there's nine of them, and we ask questions of all of them about how they're living in the economy, what are the things that concern them, what are the opportunities, what are the challenges?

Joe Weisenthal (2:20)

So big picture, how's the Alaska economy right now? Or what constitutes the Alaska economy, actually?

Mary Daly (2:26)

Well, let me tell you something I learned the first time I came to Alaska. It isn't an economy, it's a series of economies, right? If you go to the more remote areas that you can only, say, access by airplane, you can't eat, there are no roads. They live in a cashless economy, the subsistence. That looks very different than Anchorage, where you're using your digital wallet to pay for things locally that more familiar to the lower 48 And so really, when you think of Alaska, you have to think of economies, communities, and you have to imagine that the leaders here and the population here has to come together to ensure that all the decisions they make serve the variety of needs they have. I think that's what makes it so rich. It really is at the forefront of so many things that can affect the national economy that it's a really great place to learn.

Tracy Alloway (3:13)

Is Alaska of particular relevance at this particular moment in time when, you know, uncertainty is the word of the day, we do have tariffs going on, inflation is still a lingering concern, and Alaska, of course, does already have a high cost of living.

Mary Daly (3:27)

So, you know, think about Alaska as, right now, a leading indicator. They're sitting in the perfect storm, if you will, of all the things going on in our economy. They have a higher price level, and they've suffered even more from rising inflation. They are thinking hard about how do they import and how do they do this given the tariffs. They are a recipient of a tremendous amount of federal spending related to strategic defense and the military capacity and even things like satellites. So they are right there. And so coming here and seeing how they are dealing with it, one, it tells me how resilient our economy is more generally to these different changes. And two, it provides me a leading indication of how businesses in communities, they are right there on the forefront, are going to respond to this. And I can use that information to look on the lower 48, especially my state, and ask what are we seeing there. So it gives me early insight into the changes and how they are likely to affect the economy.