Although Anchorage’s strong economy in 2012 should continue this year, challenges facing the state economy may impact Alaska’s largest city as soon as 2015, according to the Anchorage Economic Development Corporation’s (AEDC) 2013 Economic Forecast.
While much of the U.S. has struggled in recent years, Anchorage has been “recession resistant,” AEDC president and CEO Bill Popp said. “We’ve been blessed with that.”
A variety of factors kept Anchorage’s economy strong last year. First, oil and gas industry employment is at its highest in a decade, with around 2,900 jobs in Anchorage. Beyond the jobs within the sector, “It is important to note the industry’s impact … accounts for approximately 25,000 Anchorage-area jobs and $1.6 billion in annual payroll,” according to the report.
Other factors keeping the region’s economy strong include tourism, state and federal budgets. After three years of infrastructure projects funded in state budgets, those projects are “finally hitting the streets,” Popp said, pointing to UAA’s new sports center as one example. Construction in both the public and private sectors will continue to bolster Anchorage’s economy this year, he said.
The study also points to development projects in Cook Inlet and elsewhere in the state that have the potential to stimulate economic activity.
One notable aspect of the survey is Anchorage’s unemployment rate, which for 2012 averaged at 5.6 percent, far below the national average of 8.1 percent. Anchorage’s rate is actually considered "full employment" by classical economists, Popp explained, because there is always about 5 percent of the population not working.
That means Anchorage’s labor pool has been “reduced to a labor puddle,” with 8,000 people looking for work, Popp said. If you’re searching for a job in Anchorage, now is a good time, Popp said, as businesses are competing to hire from a small pool of available workers.
But, Popp noted, issues within the workforce -- particularly a lack of trained workers -- remains a barrier to growth. Workers looking for better employment opportunities should focus on “getting the right training,” and “becoming more competitive as an individual,” he advised.
Other areas of the survey to note:
The health-care sector added around 500 jobs in 2012, continuing its robust growth of the last three years, and bringing the total employed to 17,700 workers. Transportation, retail trade and professional and business services are among the many other sectors that have also added jobs.
However, government jobs decreased by 400 in Anchorage, with the downward trend expected to continue in 2013. The recently announced loss of school district jobs is expected to account for the biggest decline in government jobs. But problems may lie on the horizon for the state.
This year, growth of about 1.1 percent (or 1,700 jobs) is expected in Anchorage. Popp said growth will likely continue for the next two years, but once analysts start looking at 2015, the estimations get a “little foggier,” Popp said.
An oil-price spike insulated Alaska’s economy from the impact of North Slope oil production declines, but those days may be ending. “It is not clear how we can sustain that flow of revenue in face of steady declines in production,” the study said.
Regarding the oil tax debate, Popp said that AEDC is not taking sides but realizes “there needs to be a solution.” Also of concern is the foreseeable decline in federal spending, what the study calls a “cloud on the economic horizon.”
Popp also noted that while urban centers are in “pretty good shape,” rural parts of the state are suffering from “incredibly high” unemployment rates and costs.
Read the entire 2013 Economic Forecast from AEDC.
Contact Laurel Andrews at laurel(at)alaskadispatch.com