Alaska’s recession bottoming out, report says
New numbers from a local business group offer an optimistic outlook for the local economy over the next three years.
The Anchorage Economic Development Corp. released its three-year economic outlook report for 2018, as well as findings on local consumer confidence, on Wednesday. The findings, presented at a luncheon downtown, featured a speech from Alaska Olympian Kikkan Randall on health care after her recent diagnosis of breast cancer.
Randall contrasted Anchorage's economic situation with her bounce back from a gold-medal loss in the 2014 Winter Olympics to her victory with Jessica Diggins in the women's team sprint during this year's Winter Olympics in Pyeongchang.
"I'm amazed at the parallels I see with where Anchorage is right now," Randall said. "In Sochi I had a real disappointment, I had a rough patch -- it was really hard to see how I was going to get to my goals, and I think where we are is right where I was in Sochi."
The champion skier also touched on how she's handling her cancer since her diagnosis earlier this month.
"I have committed to staying active through my treatment, because I know it's going to keep me sane and it's going to help with my treatment," Randall said.
According to the group’s report, the effects of the U.S. recession in recent years are nearing their bottom in Anchorage, leading to prospects for a gradual economic recovery in Alaska’s largest city. The report examined a mixed outlook across several sectors of the local economy.
“By all accounts 2018 will be a good year for the Anchorage visitor industry,” the report read. “The cruise industry in Alaska is enjoying solid growth and cross-gulf traffic is taking a big jump (+20 percent) in 2018. In 2019, Alaska will host 1.3 million cruise visitors; combined with other tourists, total visitation will likely top 2.2 million.”
Those gains contrast with declines in some areas, including restaurants and bars which have lost about 5 percent of their employment over the past year.
“Anchorage suffered a net loss of over 5,000 generally high-wage jobs and $400 million in annual wages between 2015 and 2017, mainly in the oil industry, professional services, construction, and state government,” the report read. “The multiplier effect of that loss in employment and income will take time to fully unfold.”
According to the report, Anchorage has seen a net loss of about 1,500 people since 2013 and AEDC expects it to lose 500 more this year. The city will also lose about 1,000 jobs in 2018, although that’s the smallest drop in three consecutive years of declining employment.
“Supported by improving consumer and investor confidence, renewed resource development, visitor industry growth, and an improving state budget situation, no further employment loss is expected for 2019 and annual growth of about 0.5 percent (+800 jobs) is anticipated through 2021,” the report read.
Sector by sector, losses across local fields of employment last year ranged from 150 to 650 jobs. Just one area – health care – has been on the rise and is expected to keep doing so this year, with AEDC expecting continued losses in the government and retail sectors. Most others are expected to level off in job losses in 2018.
Jeff Roe, CEO and president of Premera Blue Cross, spoke at Wednesday's luncheon about the challenges of providing health care on the Last Frontier including containing costs. He also touted Premera's plans for charitable giving in the state, including a $1 million donation to Covenant House Alaska last week.
"We've been operating in Alaska for more than 60 years," Roe said. "We understand we need Alaska-centric solutions to Alaska-centric problems."
Personal income levels should be flat from 2017, AEDC said, despite roughly $375 million set to enter the local economy in October from $1,600 Permanent Fund dividend checks. The last local data available on personal wealth indicators, from 2016, showed salaries and benefits fell 2.5 percent to $12.5 billion.
Here’s a look at other 2018 forecasts from the AEDC report:
Ted Stevens Anchorage International Airport is expected to see 5.55 million passengers and 3.19 million tons of air cargo this year, up 1.5 percent and 6 percent respectively from last year’s levels. Port of Alaska traffic is expected to be steady at about 3.5 million tons.
Building permit values are expected to decline slightly to roughly $380 million.
Home values, which were stable at average sale prices of $367,000 early this year, are expected to remain so. About 400 to 475 new housing units are expected to be built in town, a slight decline from 2017.
“AEDC believes that as the community climbs out of recession in 2018, investor confidence will return, investment will resume, and construction will swing back to a growth trajectory,” the report read.
Anchorage’s consumer optimism index, computed based on a survey of at least 350 local households, rose in spring of this year to 57.2 on a scale from 0 to 100 in which scores above 50 are considered positive.
The Anchorage index’s latest number is based on three results from the survey. Local economic confidence, based on current economic conditions in the community, was at 52.3, while personal financial confidence based on respondents’ personal and family situations was at 68.1 and future expectations were at 54.2.
The changes, part of a national rise, are in line with upticks in statewide consumer confidence figures reported Wednesday afternoon by the state Department of Commerce, Community and Economic Development.
"The Alaska Confidence Index rose to 57 for the second quarter, a reading five points higher than the previous quarter’s index of 52," state officials wrote. "ACI readings were up across the board, with respondents reporting stronger confidence in all six measures, including current and future expectations of state and local economies, as well as personal financial outlooks."
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