A Trip to Alaska With San Fran Fed President Mary Daly

Summary

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Odd Lots – A Trip to Alaska With San Fran Fed President Mary Daly

Hosts: Joe Weisenthal, Tracy Alloway (Bloomberg)
Guest: Mary Daly, President of the Federal Reserve Bank of San Francisco
Date: October 17, 2025

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Overview

This special episode follows Bloomberg reporters Joe Weisenthal and Tracy Alloway as they accompany San Francisco Fed President Mary Daly on her August fact-finding trip across Alaska. The journey puts a spotlight on how Alaska's unique logistics, geography, and exposure to tariffs create an amplified version of the economic themes facing the wider US: inflation, supply chain fragility, labor market shifts, and the challenges of interpreting data versus on-the-ground realities. Daly’s observations and conversations with local business and civic leaders feed into the Federal Reserve’s monetary policy deliberations, and the episode details how regional understanding shapes national economic decisions, notably a recent Fed rate cut.

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Key Discussion Points and Insights

1. Fed Rate Cut Context and Rationale

• Recent Decision: The Fed cut rates by 0.25% at its September meeting, after a year of no cuts and extensive debate.
  • “The question is not if they'll cut interest rates. The question is by how much? The answer to your question, John, is a quarter percentage point cut, as expected.”
    – Mary Daly (01:38)
• Mixed Economic Signals:
  • Labor market showing signs of slowing but remains strong.
  • Inflation running above the Fed’s 2% target, with tariffs threatening further increases.
  • “You could make a convincing case for deeper cuts, but you could also make a case for even raising benchmark rates at this point.”
    – Tracy Alloway (02:35)
• Data vs. Ground Observations:
  • Fed’s “data-dependence” is augmented by local experiences and insights.
  • “You could look at 100 series and you would never have the complete picture.”
    – Mary Daly (08:18)

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2. Why Alaska? The State as an Economic Microcosm

• Alaska’s Size and Isolation:
  • Two and a half times the size of Texas; cities and supply lines highly isolated.
  • Anchorage is a major logistics hub, but distances and lack of infrastructure amplify national issues.
  • “Alaska is the size of two and a half Texas...The only way to get from Anchorage...to Juneau, which is the capital, is a two hour plane ride.”
    – Tracy Alloway (05:43)
• Challenges Mirror Broader US Trends:
  • Facing inflation, unemployment, tariffs, housing shortages, and logistical snarls—just more acutely.
  • Alaska serves as a canary in the coal mine for national trends: “It really is sort of this canary in the coal mine almost that when you see it here, you know it's coming elsewhere.”
    – Joe Weisenthal (32:59)

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3. The Fact-Finding Expedition: Learning from Locals

• Anchorage Economic Development Corp. Gathering:
  • Over 1,500 local leaders hear Mary Daly’s economic assessments, provide feedback.
  • “Uncertainty is the word of the day... which makes it harder for us as policymakers.”
    – Mary Daly (07:44)
• On-the-Ground Insight vs. Published Data:
  • Revised jobs report matched what Daly heard in Alaska before official numbers were updated.
  • “A disciplining device for data that you don’t know if they're really accurate is what you hear from people...”
    – Mary Daly (09:38)

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4. Tariffs and Supply Chain Constraints

a. Oilfield Manufacturing (Northern Solutions Visit)

• Steel Tariffs:
  • Lead time and specialization are bigger bottlenecks than price alone.
  • Switching to US suppliers isn’t simple due to technical requirements and “Buy America” provisions.
  • “Not everybody is here to your industry. You have to have a specific heat strategy in order to even use the materials.”
    – Mary Daly (13:06)
  • “All steel isn't equal.”
    – Tracy Alloway (12:18)
  • Global supply constraints mean tariffs raise the cost, even when using US inputs.

b. Port of Alaska

• Logistics Vulnerabilities:

  • 94-96% of Alaska’s food is imported; only four container ships per week.
  • Tiny supply slack: “We have six to ten days’ worth of food in the state.”
    – Mary Daly (18:54)
  • Any shipping delay can empty shelves for days or weeks.
  • Lack of warehousing due to small population, vast area.

• Tariff “Death Spiral”:

  • Increased tariffs or port fees risk driving shippers elsewhere (e.g., to Whittier), further reducing port revenue and requiring higher fees for remaining customers.
  • “We raise our tariffs per ton enough... we now have to increase our tariffs more. So we're getting into this spiral. Food prices just went up even more.”
    – Mary Daly (22:23)
  • “The normal way that all this, any kind of extra tax ships out is you either wait longer or you pay more.”
    – Joe Weisenthal (23:26)
  • Cost pass-through to end users can be limited by consumer resistance.

• Construction & Infrastructure:

  • Modernization project ballooned from $400 million to $2.5 billion in cost, partly due to tariffs inflating material prices.
  • “We started off 10 years ago with something that was $400 million, and we're at 2.5 billion now.”
    – Port of Alaska Representative (26:47)

c. Airport as Key Logistics Node

• Anchorage Airport – Cargo Hub:
  • 3.7 million tons of cargo in 2025; fourth busiest in the world, supporting 1 in 7 local jobs.
  • Essential for intra-state and international goods movement.
  • “It's also the fourth busiest cargo airport in the world and the second busiest in the United States.”
    – Susan Alt (29:40)
  • Essential for oil field shift work and remote community supply.

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5. Alaska as Economic Early Warning

• Multiple guests and hosts note that economic shocks—tariffs, supply chain breakdowns, inflation—tend to hit Alaska first, providing a preview of potential downstream effects for the rest of the US.
• “Any shock we get in the United States just in that, I'm sorry, you get it amplified.”
  – Joe Weisenthal (32:28)
• The particularity and fragility of Alaska’s economy stress-test ideas about policy impacts.

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Notable Quotes & Memorable Moments

• On the uniqueness of Alaska’s supply chain:
  • “If we lose a ship... that's 25% of the food for the next week.”
    – Port of Alaska Representative (18:54)
• On lack of data clarity:
  • “The data alone... you would never have the complete picture.”
    – Mary Daly (08:18)
• On inflation and pass-through:
  • “How much of the extra cost coming from the tariffs is going to be absorbed by the companies themselves... and how much... is going to be passed on to consumers?”
    – Tracy Alloway (24:56)
• On Alaska as a leading indicator:
  • “It really is sort of this canary in the coal mine almost that when you see it here, you know it's coming elsewhere.”
    – Joe Weisenthal (32:59)
• On living in constant logistical stress:
  • “I've never just felt distant like I did in Alaska... it’s a state permanently in a state of sort of supply chain stress.”
    – Jill Weisenthal (35:24)
  • “All that stuff has to be transported thousands and thousands of miles to get there.”
    – Tracy Alloway (35:39)

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Key Timestamps

• Fed rate cut context – 01:38–02:35
• Why Alaska? Regional vulnerabilities – 03:53–05:43
• Insight from local business (Northern Solutions, Steel) – 10:46–13:47
• Port of Alaska fragility and logistics – 17:03–24:04
• Construction/tariffs and cost jump – 26:07–26:54
• Airport as global/local hub – 29:26–32:41
• Alaska as canary in the coal mine for US economy – 32:59–33:35
• Host reflections and wrap-up – 35:02–36:36

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Conclusion

The episode paints Alaska as an “amplifier” for US economic challenges: supply chain fragility, cost inflation, logistical bottlenecks, and the effects of national policy choices like tariffs. Mary Daly’s visit highlights how gathering local intelligence can fill gaps left by macroeconomic data, guiding more nuanced central bank decision-making. The conversations reveal the complex, cascading impacts of economic policy at the edge of the US, making Alaska a vital, if extreme, lens through which the Fed can gauge the downstream effects likely to surface elsewhere.

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Transcript

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Bloomberg Audio Studios Podcasts Radio News Seconds.

[Mary Daly]

Away the question is not if they'll cut interest rates. The question is by how much? The answer to your question, John, is a quarter percentage point cut, as expected.

[Jill Weisenthal]

But Fed Officials also see two more.

[Mary Daly]

Cuts this year in October and December.

[Tracy Alloway]

Wednesday, September 17th the Federal Open Market Committee has just wrapped up their most recent meeting in Washington, D.C. and after two days of analyzing and debating and forecasting, the committee voted to cut interest rates by 25 basis points.

[Mary Daly]

I remain squarely focused on achieving our dual mandate goals of maximum employment and stable prices for the benefit of the American people.

[Jill Weisenthal]

While the unemployment rate remains low, it.

[Mary Daly]

Has edged up, job gains have slowed.

[Jill Weisenthal]

And yeah, it's the first time the Fed has cut in over a year. Move coming after months of debate. And on the one hand, the labor market is slowing, but on the other hand, we're still trying to figure out what the impact of the tariffs is on prices and consumer spending is still going strong, right?

[Tracy Alloway]

You could make a convincing case for deeper cuts, but you could also make a case for even raising benchmark rates at this point. And we don't tend to get a lot of these types of Fed meetings where the outcome Is, you know, so debatable. So we have to ask, how did the central bank actually make the decision to cut to do that? Let's back up six weeks to the beginning of August and head north. In fact, we are going 3,000 miles north.

[Joe Weisenthal]

I added to my collection of flies for fly fishing yesterday.

[Tracy Alloway]

I am slightly obsessed with fishing lures. I don't even fish.

[Joe Weisenthal]

I don't know why.

[Tracy Alloway]

I just.

[Joe Weisenthal]

I like to fish.

[Tracy Alloway]

That's Mary Daly, president of the Federal Reserve bank of San Francisco.

[Joe Weisenthal]

So here's why I get these flies. I go to places all over that have fly fishing, and then I buy a fly that's specific to their area to remind you. It's sort of geeky, but it reminds me that everybody fishes, but that you have to have a local knowledge to fish.

[Tracy Alloway]

Well, yeah, you have to have, like, the fly that's in season for that particular location.

[Joe Weisenthal]

And it kind of is why you go to the places to visit. To learn more about the economy. You sort of have to. You can understand it, but you don't know it until you have the locality. So you don't do it.

[Tracy Alloway]

Daly oversees the 12th district of the Fed. It's the largest of the districts and includes the nine most western US States, plus the most northern, the Last Frontier, the Great Land, the Sourdough State. I am talking about Alaska, obviously.

[Jill Weisenthal]

In early August, Mary Daly visited Anchorage, the largest city and biggest port in Alaska. It was actually her third visit to the state this year. And she's on a mission of sorts.

[Tracy Alloway]

An expedition, sure.

[Jill Weisenthal]

She's on a northern expedition to try to find answers to the questions that everyone, all Fed officials, everyone else are trying to constantly puzzle out right now. What is going on with the US Economy? Where's it headed?

[Joe Weisenthal]

I've heard that everywhere we've gone that the city's under so much pressure and it's hard to. What is your diagnosis about how this happened?

[Tracy Alloway]

So what was she seeing and how did it actually inform the Fed's decision to cut rates? A month later, on this special edition of the Odd Lots podcast, we are going to follow along as Daley tours her district, speaking to local business leaders. Like a factory that makes parts for the oil industry and the airport and the port itself to try to get a closer look at the giant logistics hub that is the city of Anchorage.

[Jill Weisenthal]

You know, every town in the world, I think, probably likes to describe its residents as, quote, scrappy, unquote, but this really is like the first place I've been where I think that might actually be true. People in Alaska really do seem scrappy.

[Tracy Alloway]

They have to be to get along up here. We really are on the edge of this vast wilderness. In fact, one thing we learned is that people up here love to compare the size of their state to how many Texases it would fit in.

[Jill Weisenthal]

Which to be fair, Texans love to do that stuff as well.

[Tracy Alloway]

Yeah, the answer is two and a half. By the way, Alaska is the size of two and a half Texas. Okay, so everyone knows Alaska is big, but until you visit, it's hard to really appreciate just how big. The only way to get from Anchorage, which is the largest city, to Juneau, which is the capital, is a two hour plane ride. And if you want to haul supplies from a place like Fairbanks, which is in the interior, to the oil fields on the north slope, that is a 10 hour drive on what is mostly a dirt road with one gas station on the way.

[Jill Weisenthal]

It's really isolated. There's not even a railroad that takes you to the lower 48 or even to Canada. And there are mountains that basically cut off huge sections of the state from each other.

[Tracy Alloway]

But as we learned during our visit, Alaska is still dealing with all the same issues that the rest of the US faces. So things like inflation, unemployment, tariffs, housing shortages, logistical snarls.

[Jill Weisenthal]

That's why Mary is here. I mean, to try to get a handle on the broader U.S. economy by looking at a place that at least right now, is sort of ground zero.

[Joe Weisenthal]

For a lot of these trends is to collect information. So we collect information not only on the wide array of data that are available, and then we have history and models, we have all of those things and, and then we have conversations.

[Jill Weisenthal]

Today, Mary is the guest of honor at the Anchorage Economic Development Corporation's annual gathering. The Denina Convention center downtown is overflowing with more than 1500 local business owners, politicians, civic leaders. They're here to mingle, network, talk, shop, and hear Mary's thoughts on where she thinks the economy stands, as well as.

[Joe Weisenthal]

Counting the cranes as a future looking variable is so important. So I just want to thank everybody who's ever answered the Beige book who's ever met with us. If you like the beige book, we'll send you another one. It used to be beige, by the way.

[Tracy Alloway]

So this is the fact finding portion of the expedition because yes, Mary is giving a speech about what she's seeing in the economy, but she's also learning from the local businesses who are listening to her.

[Joe Weisenthal]

And what I've been hearing is that the uncertainty is the word of the day. I guess it was on the bingo card. And uncertainty makes it harder for firms and households to know what they're doing next, which makes it harder for us as policymakers, Federal Reserve policymakers, to know exactly how the economy will evolve.

[Jill Weisenthal]

Mary isn't a voting member of the committee this year, but as a Reserve bank president, she still participates in all the FOMC meetings where she offers her own assessments and opinions based on what she's seeing in the economy of the 12th district right now. And so her views still do help shape the committee's decision.

[Joe Weisenthal]

All the states in my district on a regular basis, as are my teams. And the reason for that is so that we can understand firsthand what what you are in, particularly thinking about what you see as your opportunities, what do you see as your challenges, but also how do you see the economy today? There's an interesting statistic we just heard that people feel decently, pretty good about their own situation, but pessimistic about the economy. We need to understand why. What are you seeing as you look out? Businesses are making decisions today about what they're going to do at the end of the year. We need to know what those are. We need to know how households are feeling. Are they feeling strapped? Are they feeling like they have enough disposable income? And the data alone, looking at the published data, not, you know, all the micro data, you could look at 100 series and you would never have the complete picture.

[Tracy Alloway]

I'm sure we've all heard the phrase data dependent. And the Fed leans heavily on the volumes and volumes of economic statistics that get released every month when making its decisions. But sometimes you can augment that data with things you observe on the ground.

[Jill Weisenthal]

Right. So just a few days before the Alaska trip, we got a jobs report that heavily revised down the employment numbers from the earlier months. It was a big surprise, huge moment for the markets, but it didn't really surprise Mary.

[Joe Weisenthal]

And what was interesting about the jobs report on Friday is it better matched in the direction of change, not in the magnitude. It better matched what I've been hearing. And so a disciplining device for data that you don't know if they're really accurate is what you hear from people, because people do not tell you, I feel really, really comfortable getting a job only to find out that the job market report is bad. What they will tell you is, boy, it looks really worrisome out there. And then you get a jobs report that doesn't look like the rapid job growth that was the thing that was out of whack the rapid job growth from the month before is what I said. Well, really, that's not what I'm hearing. What's the gap? And we spent a lot of time digging in and unpacking that. But then when the jobs market report got revised, I was like, okay, that makes more sense.

[Tracy Alloway]

But of course, jobs aren't. The only thing the Fed cares about. Its mandate is low unemployment and stable inflation. And these things seem to be operating at cross currents right now. Inflation has been above the Fed's 2% target for a while, and the concern is that with tariffs coming in from the Trump administration, prices are just going to go up further.

[Northern Solutions Representative]

We'll just kind of move through.

[Jill Weisenthal]

So to understand the risk here, we're following Mary to the offices of Northern Solutions. It's an Alaskan company which makes components and parts for the oil industry, which is obviously big business in the state.

[Tracy Alloway]

Yeah, all the pipes and casings and spools and valves and things like that.

[Jill Weisenthal]

And as you can imagine, steel is a pretty key input for a lot of these products. Since June, there's been a whopping 50% tariff on steel and aluminum coming from abroad prices.

[Northern Solutions Representative]

So if we compare 21 to today, it's cheaper.

[Joe Weisenthal]

I see.

[Northern Solutions Representative]

If we Compare today to 23, 24. Yeah. It's small.

[Jill Weisenthal]

And companies like Northern Solutions are trying to figure out just how to navigate all these new trade restrictions. It's not as easy as just say, switching to a US Supplier, but if.

[Joe Weisenthal]

You do that and you can't get the continuity, well, then that's a cost to you that nothing exact down. So it's. So it's really helpful for us to think about when we try to think about the effects of tariffs. What are the effects of changes on any administration on your industry?

[Port of Alaska Representative]

Absolutely.

[Northern Solutions Representative]

I mean, the tariffs. So the tariffs balanced it. So I can go to a US Mill, I can go to a foreign mill, and I'm going to pay the same price now with that tariff. But it's the industry that mill's geared to and the lead time of that steel that's the problem.

[Jill Weisenthal]

That.

[Northern Solutions Representative]

And honestly, we have a lot of small steel mills here in this country, a lot of small ones. They're very, very specific to a certain industry.

[Tracy Alloway]

In other words, all steel isn't equal.

[Northern Solutions Representative]

So there's mills all around the world, Steel mills all around the world. I can't use them all because of that, because of their MTRs, not country of origin, just how well they do it. Okay, so we have a lot of steel that comes into the US to tubing that comes from brought in as green tube that'll be heat treated in the US so that MTR is generated from a US heat treat facility and now it's 51% American. And then you avoid all the stuff on it.

[Joe Weisenthal]

I see.

[Northern Solutions Representative]

So when we talk about mills that I can use, they're all over the place, but I can't use them all.

[Tracy Alloway]

This is actually a really good example of the kind of information that makes Mary's visit so important. It's the kind of thing that you can't really learn from an economic data release.

[Joe Weisenthal]

I'm going to use that. One of the things that just to show you how you have used things I've learned is that if you think about how likely are we shift all of our productions of the United States or how likely is the global market on steel to be able to if we put it all back today. I mean, you've taught me two things already, that not everybody is here to your industry. And you have to have a specific heat strategy in order to even use the materials. They have to be a certain quality. So it just means that you don't have the open marketplace that I think many people would think you have.

[Northern Solutions Representative]

Right.

[Joe Weisenthal]

So they would just look at the number of manufacturers and say, oh, well, look, you can do all of this. But yeah, there's barriers there.

[Northern Solutions Representative]

There are barriers.

[Joe Weisenthal]

Very helpful.

[Tracy Alloway]

You know, there's another big Alaskan business that's grappling with tariffs and that is the port. Next stop, the port of Alaska.

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[Joe Weisenthal]

Have a demand for those ships anymore, so they'll decommission.

[Mary Daly]

Yeah, although I'll say Madsen in particular. So they have three ships that they rotate between and they have the Port.

[Jill Weisenthal]

Of Alaska used to be called the Port of Anchorage by the way. Very cool. It's a deep water port. The tides here are crazy. Here's Jim Jaeger, the port's acting director, explaining what they're having to deal with.

[Mary Daly]

So Port of Alaska has a variety of issues that we're not unique, except that we're unique in the combination of issues we have. So what are our challenges? For instance, we have a pretty fast current. We have a 30 foot tide flux. So between low tide and high tide it's 30 foot.

[Jill Weisenthal]

30 foot.

[Mary Daly]

And our maximum tide flux between the lowest tide of the season and the highest tide is 40ft.

[Jill Weisenthal]

I heard as the second biggest time flux in the world.

[Mary Daly]

Yeah, it's actually depending on it, it's probably fifth or sixth. But in places where people actually do commerce we're number two.

[Tracy Alloway]

So because of the harsh growing conditions and the short summer season in Alaska, almost all of the state's fresh food has to be imported. And the vast majority of that food arrives by boat from west coast piers, mostly Seattle and Tacoma. And with only four ships coming in per week, Alaska's supply lines are stretched very tight. And Mary has actually experience the downside of those stretched supply lines before. Here she is talking with Jim about it.

[Joe Weisenthal]

Running out of things. We ran out of this. When I was here in May, the hotel ran out of coffee because they said the supplier hadn't gotten it in and they wouldn't get it until in May.

[Mary Daly]

We had, we lost a shift because of a mechanical. So if your timing was correct, you may have. Your coffee may have been coming up.

[Joe Weisenthal]

Yeah, I went down for coffee and she said, we are. We don't have any coffee.

[Mary Daly]

That actually demonstrates how skinny our supply line.

[Joe Weisenthal]

Yeah, no, that's. That, that's why I wanted to talk about it. I'm still, I'm not traumatized by my lack of coffee, but I just was surprised at how. I'm surprised at how fragile or vulnerable.

[Mary Daly]

We have six to 10 days worth of food in the state. So we import. Depending on whose numbers you believe, between 94 and 96% of the food consumed in Alaska is, is imported. Figure we're handling three quarters of that. So, you know, if that's coming in, we have four scheduled container ships a week, two on Sundays, two on Tuesdays. If we lose a ship, you know, that's 25% of the food for the next week. And it is very realistic that if you walk into the Fred Meyer grocery store and you go, huh, why is there no salad? You know, that's why. And you know, it's an interesting take. If you go down to the lower 48 and say, go to Home Depot. Home Depot's lower 48 stores have a restock where they can restock an entire store in 32 hours. So if you're on the Gulf coast and they have a hurricane, they completely sell the store out. They're set up so that they can come in 32 hours later. They're totally restocked. Okay, now apply that model to Alaska, where we have no warehousing 32 hours. It means if we have an earthquake or something happens here and they empty out the store, they place the order 32 hours to get it to Tacoma on the dock. There's then a 66 and a half hour float up the Anchorage. And that's assuming you're on the right cycle and you don't have to wait a couple of days until the next ship leaves. So it gets up here in 66 and a half hours and then it's got to make it from Anchorage to wherever the final destination is. So if you're in midtown Anchorage, well, you'll be, it'll be there this afternoon. If it's in Fairbanks, that's another day. So suddenly your 32 hour restock, you know, could be six, seven days.

[Tracy Alloway]

Can I ask a dumb question, but why don't you build some warehousing capacity?

[Joe Weisenthal]

That was my question.

[Jill Weisenthal]

Well, I don't think it's dumb.

[Joe Weisenthal]

I'm just going to ask.

[Mary Daly]

So our basic problem is that we have a very small population spread out over a huge area. You know, three quarters of a million people in the entire state. So basically a city.

[Joe Weisenthal]

Right.

[Mary Daly]

And Our state is 2 1/2 times the size of Texas.

[Port of Alaska Representative]

But if you really want to see it go to Bush Alaska, that's John.

[Jill Weisenthal]

Daly, an engineer who is leading a big modernization effort at the port.

[Port of Alaska Representative]

So go to these remote communities and then you'll really see the effect of what you're talking about. It's pronounced. If they, if they get. Some of these communities only get three, four barges a year, basically. Milk is hugely expensive. Anything fresh is very expensive. If you go to, you know, I work living here, I've worked in a lot of remote places. We're talking Kodiak or St. Paul island or Bethel or something. Then you really see the, the end of the supply chain. And it's super sensitive in those locations.

[Joe Weisenthal]

So it's very, it can be vulnerable here, but it's sort of fragile, much more vulnerable.

[Port of Alaska Representative]

And we're kind of a hub, It's a hub and spoke system. So we're a hub that helps supply those areas. And if we're sensitive, they are 10 times.

[Joe Weisenthal]

Yeah, that makes a lot of sense.

[Jill Weisenthal]

Now just to make things even more complicated, the port also has tariffs to contend with. As the primary import hub from the entire state. You can imagine that the port thinks about this issue quite a bit. Not only could tariffs impact trade, all those ships going in and out of the harbor, stopping to refuel, so forth, but they could get the first look at how companies choose to respond to any increase in costs.

[Joe Weisenthal]

Also just as likely to push up the price of goods.

[Tracy Alloway]

Oh yeah.

[Joe Weisenthal]

So they're going to face tariffs on goods, but they're also going to face port fees on goods. And so then it's just more expensive.

[Mary Daly]

It gets Worse though, because we have the death spiral. So we raise our tariffs and then right now most of the cargoes coming in are deepwater vessels. But if we raise our tariffs per ton enough, at some point, some folks who are shipping things that are non time sensitive, new cars, you know, we'll go, you know, for the tariff, I'm just going to bring it up on a barge into Whittier and I'll save the tariff. And then what happens is that then reduces our overall tonnage. We still have to make our debt payment, so we now have to increase our tariffs more. So we're getting into this spiral. Food prices just went up even more. And oh, by the way, maybe you're not paying the tariff on your truck, but you are going to get it 10 days later than you thought you were. So you're getting worse cargo service also. So the impact on Alaskans is they're paying more for certain things like food and everything else is the cargo service is less good.

[Joe Weisenthal]

Well, the, the normal way that all this, any kind of extra tax ships out is you either wait longer or you pay more. Yeah, that's, that's just how it works. I mean, in any of the things. That's why I tried to put a optimistic end point on the speech is because you can. I think ultimately it's fair. You guys are very enthusiastic about what you're trying to do. But there's the other side of it which can easily demoralize people. Right. It seems like an insurmountable problem when you think of the cost structure here. But we have no option. No, exactly. So you can either back yourself into a corner with no option or you can just say, well, and be sad. Right. Or you can just get busy with purpose. Right.

[Jill Weisenthal]

So yeah, it's sort of common knowledge that it's expensive to live in Alaska. It just costs more to get goods and services up here. And residents understand that's part of the deal. But there are limits to just how much of a premium Alaskans are willing to pay to live here and just how much businesses can get away with when it comes to pricing. Cheryl Beckham, director of finance at the Port of Alaska, talks about this point with Mary.

[Joe Weisenthal]

I'm revealing my economist background, but it just makes sense that the price would be higher here because you have all these additional costs. Right. But you're saying the small communities think it should be like it is in the lower 48. So you have to split this difference. So there's a similar. So they understand that there's a transportation Cost. But what is that market that they're willing to accept? Right. So as costs go up, fuel goes up, and the, you know, the fuel bars, the tankers that bring it, they cost more for. So you're probably always having a little less margin up here, right?

[Mary Daly]

Yes.

[Tracy Alloway]

Right.

[Jill Weisenthal]

So you do.

[Tracy Alloway]

This is the really big question. How much of the extra cost coming from the tariffs is going to be absorbed by the companies themselves, whether it's importers or the transportation businesses or middlemen like the port, and how much of the cost is going to be passed on to consumers, so which would basically risk fanning inflation again.

[Jill Weisenthal]

And that is a big deal for a state which already has a very high cost of living, precisely because all this stuff needs to be imported and often sent on to really remote locations within the state. And even if you're not necessarily importing foreign goods, tariffs can still push up the price of what's made domestically.

[Joe Weisenthal]

Question that we're grappling with, making monetary policy is there's taxes, immigration, deregulation, tariffs, and those things have different likely effects, et cetera. So one of the questions I've been asking people when we meet is do any of those things, can you see any of those effects immediately affecting your business here? And do you have any sense of if they will immediately.

[Port of Alaska Representative]

Well, the tariff thing has come up in our construction, so we have a lot of big construction coming up, like a couple billion dollars worth of infrastructure.

[Tracy Alloway]

Is that port specific?

[Mary Daly]

Yeah, that's our document.

[Joe Weisenthal]

Okay, Right.

[Port of Alaska Representative]

And. And most of that is by America because we're trying to get federal funding and that comes with the territory. So the tariffs are not directly affecting that because theoretically that's on foreign goods.

[Joe Weisenthal]

Right.

[Port of Alaska Representative]

However, it floats the whole.

[Joe Weisenthal]

Pushes the whole district, the whole harbor up.

[Port of Alaska Representative]

So the price of steel, Buy America, Steel Buy America, this, Buy America, that all goes up. So it has a large effect on that.

[Joe Weisenthal]

How much have you seen prices rise, maybe from when you were originally planning it? I mean, something rough.

[Port of Alaska Representative]

No, I want to admit that number, but it's a large number.

[Joe Weisenthal]

Right.

[Port of Alaska Representative]

We started off 10 years ago with something that was $400 million, and we're at 2.5 billion now.

[Tracy Alloway]

Right. The Port of Alaska is in the middle of a two and a half billion dollar modernization program. So it's a pretty bad time for the cost of materials to be going up and there also the financing costs. Right. If interest rates go up because inflation is rising, that also adds to the cost, possibly exponentially.

[Joe Weisenthal]

So can I ask a question about, from all three of you, is like, if you think about the work you do here and the things that are facing Alaska with all the, you know, just the economy, the changes in policy, interest rates, etc. What, what's worrying you right now?

[Port of Alaska Representative]

What worries me is financing our project, our $2.5 billion project. We have some state and federal funds. The rest of it is slated for local revenue bonds.

[Joe Weisenthal]

Okay.

[Port of Alaska Representative]

And that's.

[Joe Weisenthal]

Do you think those will pass?

[Port of Alaska Representative]

They've given us authority to issue those, but the question is how, how much can you push into the market once. And it puts our debt load from whatever it is, 50 million, we have now up to billions.

[Mary Daly]

1.1.

[Joe Weisenthal]

We have authority for 1.1 billion.

[Port of Alaska Representative]

It greatly increases our debt load. So that's the thing.

[Mary Daly]

So our, Our goal is 1/3, 1/3, 1/3 federal money, 1/3 state money, 1/3 local money. For our next stock, it's going to be roughly $900 million.

[Joe Weisenthal]

Right.

[Mary Daly]

At this point, we have 90% is going to be local, 5% state, 5% federal. If we go forward to finance the 90%, that's the local share. After 40 years, $2.28 billion is what we're going to pay back for 900 billion. So with that, the cost of financing is going to be huge. And what is that going to do to overall cargo rates? Remember, one of our things is we're trying to maintain a cost effective cargo system and boy, when do we get crushed.

[Tracy Alloway]

Speaking of effective cargo systems, a huge chunk of Alaska's imports go through the port, as we've been discussing. But it is not the only logistics hub in town.

[Jill Weisenthal]

Right. To get a complete picture, we've got to check out the airport, which is exactly where Mary is heading next.

[Joe Weisenthal]

How much would a plane like that cost?

[Mary Daly]

3 million. Yeah, that's lightly used.

[Northern Solutions Representative]

3.8.

[Port of Alaska Representative]

We have, we have a, we have a handful of those.

[Joe Weisenthal]

Yeah. What are the planes that go out?

[Susan Alt]

I'm Susan Alt on the Alaska International Airport system controller and we're all glad to have you here today to show off our system. So I'll go ahead and get going. So what is the Alaska International Airport system? Also known as AIAs, it is made up of. Ted Stevens, Anchorage International Airport, which is the largest passenger airport in the state of Alaska. It's also the fourth busiest cargo airport in the world and the second busiest in the United States. Anchorage's impact is the largest airport in Alaska. Passenger activity for fiscal year 25 ended at four point, excuse me, 5.4 million passengers served air cargo for 2025. We had 3.7 million tons for 2025. And again, as I said, we're number two in the USA and number four in the world with regards to cargo. We support one in seven jobs in the Anchorage area and provide 1.8 billion in annual economic impact to the state. And you can see on the screen about the direct jobs and wages impact versus the indirect and induced jobs and wages. So we're pretty significant economic boom for the state of Alaska.

[Jill Weisenthal]

Air transport is huge for Alaska. And the Anchorage airport basically acts like a truck stop for the whole state and really global trade. Fully loaded cargo planes moving stuff from Asia, the Mideast parts of Europe will stop here to refuel on their way to the rest of North America. And for Alaskans, it's the main depot for most of the goods they order from elsewhere, which are sorted in the huge FedEx and UPS hangars before being distributed throughout the state.

[Tracy Alloway]

It's also a commuter hub. Many of the oil workers on the North Slope work in two week on two week off shifts. They catch a small plane up to the fields where they live in company housing while on the job and then they return to their families and hometown for the rest of the month.

[Northern Solutions Representative]

People that effectively use that as a suburb.

[Mary Daly]

Yeah, so this is the conical Phillips.

[Jill Weisenthal]

Airplane that's going up to North Slope. So if you're a slope worker and you work two weeks on, two weeks.

[Mary Daly]

Off, you can live in Kenai. Nice Alaska lifestyle over there. Hop on a Grand Aviation plane, 35 minutes, you're at the door, you walk over the next terminal and get on.

[Tracy Alloway]

Your North Slope like the rest of the country. Housing is a major issue even in a state with, say it with me, Joe, twice. The land of Texas.

[Mary Daly]

Yeah.

[Jill Weisenthal]

As we've seen over and over, Alaska faces all the issues that the rest of the US does, only at least right now, more acutely, there's a variety.

[Joe Weisenthal]

Of other things going on. And if you're already, your infrastructure is already a little vulnerable, then you, you can imagine any shock we get in the United States just in that, I'm sorry, you get it amplified.

[Mary Daly]

Yeah, no, that's absolutely true.

[Joe Weisenthal]

And so you kind of leading indicator which helps me make good decisions when I talk to all of you.

[Jill Weisenthal]

Mary is going straight from the airport to the airport. I guess she's flying to the lower 48. And there's obviously a lot of possible takeaways from the trip.

[Joe Weisenthal]

This cost structure of Alaska was something I think we learned the most about today. Just why are the prices so much higher and where Would you ever try to mitigate that? And of course, the things that are going on like inflation or just changes in how goods are shipped or supply chain challenges, they're just magnified in Alaska. And I think we also learned, you know, I learned that they happen here first. It really is sort of this canary in the coal mine almost that when you see it here, you know it's coming elsewhere. It's going to be lower in all likelihood because there's other ways to insure yourselves, but you're going to see it.

[Tracy Alloway]

We don't know exactly what was discussed at the Fed September meeting, or at least we don't know until the transcript is published in like 2030. But I think you can get a good sense of what a trip like this actually adds to the conversation when Fed governors are all sitting around the table trying to figure out what to do next.

[Joe Weisenthal]

So one of the things that is challenging right now, it was challenging back in the days when we were trying to fight high inflation. And it's definitely challenging today when you're trying to figure out the real impact of tariffs, not only on growth, but on the, on inflation. As just one example, unpacking what's happening in Alaska and knowing at whatever point how long this is going to take because of the, you know, the non fungibility of steel, the interoperability of some of the supply chain networks, all of those things give me insights that I can then take back to the meeting. And then it's not just us exchanging forecast. I think they're going to be like this long. I think they're going to take this long. It provides evidence, underlying evidence that you can't find in your statistics because the statistics, the statistics, we just don't know. All we're doing is projecting. But now we have our projections filled out by data and information and that makes a huge difference when you're trying to make good policy.

[Jill Weisenthal]

That's it for our special Alaska episode. We hope you enjoyed tagging along with us and Mary on the Anchorage expedition.

[Tracy Alloway]

Joe, what stuck out to you?

[Jill Weisenthal]

So many things stuck out to me from that trip, you know, like being in Alaska. It really did feel like the end of the world, didn't it? Like the edge of the empire.

[Tracy Alloway]

Yeah, it definitely felt frontier, like for sure.

[Jill Weisenthal]

I've been in rural areas before, even more rural obviously than an urban area like Anchorage. But I've never just felt distant like I did in Alaska. And so it's very easy to understand why it's a state permanently in a state of sort of supply Chain stress.

[Joe Weisenthal]

Yeah.

[Tracy Alloway]

That's what really stood out to me as well. Because when you go to a place like Anchorage, I mean, there are a lot of the same restaurants and chain stores that you would see in any other place in America. The difference is all that stuff has to be transported thousands and thousands of miles to get there.

[Jill Weisenthal]

Yeah. No, it's a constant strain. Just extraordinary. You know, I knew these things about how far flung everything was, but then say, going to the airport and seeing how small planes served, the just sort of worker commuter system was really eye opening. Or just the sheer number of people who own planes themselves, you know, like they have these pontoon planes in the water that in another state would be how people would have their boats in the marina. Except Alaska, it's planned like, it's just, it's permanently, it's permanently stretched.

[Tracy Alloway]

Do you think we could go to Hawaii next? That's in the 12th district. Right?

[Jill Weisenthal]

Let's do it. I'm down.

[Tracy Alloway]

Shall we leave it there?

[Jill Weisenthal]

Let's leave it there.

[Tracy Alloway]

This has been another episode of the All Thoughts podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.

[Jill Weisenthal]

And I'm Jill Weisenthal. You can follow me at the stalwart thank you to Mary Daly and everyone at the San Francisco Fed, including Jen Chamberlain, for letting us come along on their fact finding journey. Thank you also to the Port of Alaska, the Alaska International Airport system and Northern Solutions for the tour of their facilities. Thank you to Ashley Ebnet of the Anchorage Economic Development Corporation. And a final thank you to all the Alaskans who took the time to talk to us about their estate. Everyone was so friendly.

[Tracy Alloway]

And don't forget Scrappy.

[Jill Weisenthal]

You can follow our producers, Carmen Rodriguez, Armenarmon, Dashiell Bennett at Dashbot and Cale Brooks at Kalebrooks. For more odd lots content go to bloomberg.com oddlots where we have a daily newsletter and all of our episodes and and you can chat about all of these topics 24. 7 in our Discord Discord GG oddlots.

[Tracy Alloway]

And if you enjoy odd lots, if you like it when we go to far flung places, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there.

[Joe Weisenthal]

Thanks for listening Sam.

[Tracy Alloway]

There are two kinds of people in the world.

[Mary Daly]

People who think about climate change and.

[Tracy Alloway]

People who are doing something about it.

[Mary Daly]

On the Zero podcast.

[Tracy Alloway]

We talk to both kinds of people.

[Mary Daly]

People you've heard of, like Bill Gates.

[Port of Alaska Representative]

I'm looking at what the world has to do to get to zero, not using climate as a moral crusade and.

[Mary Daly]

The creative minds you haven't heard of yet. It is serious stuff, but never doom and gloom. I am Akshat Ratty.

[Tracy Alloway]

Listen to Zero every Thursday from Bloomberg Podcasts on Apple, Spotify or anywhere else you get your podcasts.