Anchorage’s economy is recovering from the impacts of COVID-19, but employment won’t rebound to pre-pandemic levels until the end of 2024, a new report projects.
The city had already experienced four straight years of jobs losses when the pandemic arrived in 2020. It then erased more than 20,000 jobs in Anchorage during the worst stretch last year, about a 15% drop, according to the Anchorage Economic Development Corp.’s annual three-year forecast.
But employment began growing again this spring. The trend should continue as tourism recovers with more cruise ships returning next year, and air cargo traffic at the Ted Stevens Anchorage International Airport continues to increase, according to the report.
Last year was “incredibly hard” for Anchorage, said Bill Popp, head of the development corporation, during an online presentation on the report Wednesday. But “so far 2021 is headed in the right direction,” he said.
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The city’s economy should add about 4,000 jobs by the end of this year and about 12,000 jobs through 2024, the report forecasts.
Popp said that will make employment levels roughly equal to the pre-pandemic count, just a few hundred jobs shy of the 150,100 jobs recorded in Anchorage in 2019.
The city’s recovery faces near-term challenges, like a labor shortage that is helping hold down job numbers, according to the 24-page report.
“Labor supply is weighing down Anchorage’s employment counts, i.e., many employers are currently unable to fill vacant positions,” the report says. “It is difficult to know how much higher Anchorage’s employment numbers would be if not for a labor shortage, but certainly by hundreds of jobs.”
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Also, the fast-spreading delta strain of the COVID-19 variant continues to add uncertainty and could stall the recovery if it leads to new restrictions on business and travel, he said.
“If you haven’t gotten the shot, get the shot,” Popp said during the presentation.
The Anchorage economic group released other reports on Wednesday, including survey results showing that consumer optimism has improved dramatically since last year, returning to late 2019 levels.
That could bode well for future spending that helps buoy the Anchorage economy, Popp said.
In another bright spot, income grew 3% to $20.7 billion last year, thanks to a strong market and billions of dollars in federal aid that flowed into the local economy in the form of stimulus checks and other emergency subsidies.
Wages also dropped less than expected, by 1.3% last year, and should begin growing again next year, the report says.
Two sectors will help lead the recovery over the next three years are transportation and leisure and hospitality, Popp said.
The transportation sector will continue to see passenger travel bounce back, while air cargo traffic at the Ted Stevens airport should grow annually, by about 17% through 2024.
A slew of new projects designed to boost the number of jumbo jets landing at the airport, the world’s fourth busiest air cargo stop, could also buttress the economy in the coming years, he said.
Employment at restaurants, bars and hotels will also be key to the recovery, he said. Tourism is already doing better than expected this year, and should bounce back even stronger next year as more cruise ships return to Alaska, helping those businesses, he said.
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Oil and gas employment in Anchorage, considered a pillar of the economy, plunged during the pandemic. It should begin to recover next year, the report says. But in 2024, it will still fall about 100 jobs short of the 2,500 Anchorage jobs the sector recorded before the pandemic.
The economy also faces long-term labor challenges, Popp said.
Anchorage job numbers have fallen since 2015, and workers have been leaving the city for new opportunities in the Lower 48 or the Matanuska-Susitna area, the report says.
That has helped drive Anchorage’s population lower for several years.
The city’s population fell by about 3,500 residents between 2019 and 2020, the biggest single-year loss since the late 1980s. The population is expected to decline until 2023, where it should stabilize at about 285,000 residents.
With the entire U.S. also recovering from the pandemic, Anchorage employers will continue to face competition from the Lower 48 as they look for workers.
And with the stock market still strong and the pandemic continuing, older workers are expected to continue pursuing earlier retirement, adding more strain to the workforce, he said.
“We have fairly significant workforce challenges we face in the coming years,” Popp said. “We’ll have to work to stem the tide of people leaving, and learn what can we to get more people with skills we don’t have to move here.”