AEDC report shows businesses cautiously optimistic about Anchorage economy
Two key Anchorage economic forecasts offer guarded optimism for 2019, with businesses expressing greater hope for growth and a local business group projecting modest job increases.
The figures reflect a three-year economic outlook released last year by the Anchorage Economic Development Corp (AEDC).
The McDowell Group’s Annual Business Confidence Index for 2019, presented Monday by AEDC, shows marked increases in confidence regarding the local economy among just over 200 area businesses and organizations. The largest jump from 2018 — 15 percentage points — was for overall confidence in Anchorage’s economy, with smaller rises of 3.9 to 6.9 points among categories ranging from employment to business confidence.
“When asked how the Anchorage economy will fare in 2019 compared to 2018, over half of businesses (58 percent) were optimistic, saying they expect it to fare better – more than twice as many as those saying it would fare worse (23 percent),” McDowell Group staff wrote. “These results are largely inverted from 2018, when 29 percent expected the economy to fare better, and 58 percent expected it to worsen.”
Asked about barriers to their growth, 90 percent of those surveyed cited the condition of the state economy, followed by 75 percent which named health-insurance costs and 62 percent which mentioned the availability of a professional or technical workforce.
The single issue considered “very important” to Anchorage’s economy by the most respondents is the sustainability of the state’s operating budget, cited by 85 percent of businesses. Some 73 percent mentioned community and neighborhood safety, with 72 percent listing increased North Slope oil production to round out the top three.
Nearly three-quarters of respondents supported an increase in Port of Alaska fees to pay for the Anchorage facility’s modernization, which port officials said the projected cost of has risen to nearly $2 billion. Support for a municipal sales tax rose in this year’s survey, from 49 percent in 2018 to 63 percent in 2019.
Surveyed businesses overwhelmingly supported addressing Alaska’s budget deficit via reductions to state spending and Permanent Fund dividends, at 81 percent and 63 percent respectively, over tax-based means or eliminating dividends. The most popular option, a statewide sales tax, drew just 55 percent support.
One local businessman echos at least some of the conclusions of the report. Daniel Greenhalgh, owner of Skinny Raven Sports, said he is feeling optimistic about 2019. He believes his customers are, too.
"Just the attitude among the people who work with us, that I see in the community," Greenhalgh said. "It's definitely on an upward swing. Especially from 18 months ago, it feels monumentally different."
Greenhalgh said his business, which is celebrating its 25th year in downtown Anchorage, has undergone ups and downs with the local economy. He said the challenges started in 2014.
"Alaska businesses know this, the boom and bust, so we've seen little lumps before. But this was a sustained challenge," he said.
As a result, Greenhalgh said, they closed the high-end women's store Her Tern, across the street. He said they also started to measure success in different ways.
"Focusing on things that really matter: being a hub of community, helping improve the quality of peoples lives and not focusing on just trying to improve your sales or sell more stuff."
Skinny Raven is involved in an ever-growing list of races and community events which Greenhalgh said has actually helped their bottom line. But there are still challenges, including the rising cost of health insurance, which was listed as a barrier to business growth in the report.
Greenhalgh provides insurance for his employees but said that's getting harder every year.
"The cost is so ridiculous," said Greenhalgh. "It's not reasonable for anybody."
The biggest barrier to business growth listed in the report was concern about the state budget deficit. But Greenhalgh said he doesn't worry about what he can't control. Instead he's feeling confident that the worst may be over, for now.
AEDC’s 2019 economic forecast projects relatively flat population growth, holding this year at about 295,500 people. The corporation cites an annual turnover rate of 12 percent among Alaska’s population — the highest of any state in the nation.
Anchorage’s declining population also mirrors a statewide graying trend according to the state Department of Labor and Workforce Development, with people 65 years or older rising from 6.3 percent to 10 percent between 2000 and 2018 — and on track to reach 15 percent by 2025.
Anchorage is set to gain roughly 300 jobs over the course of 2019, according to the AEDC report, after losing about 1,200 jobs in 2018, a slight increase from what AEDC projected as a 1,000-job loss for the year. The 2019 report’s sector-by-sector projections call for the year’s worst loss, 400 jobs, in government positions — offset by a 400-job gain in health care employment.
But the state's $1.6 billion budget deficit is hanging over the economy. The report notes mismanagement of the deficit could easily turn the positive trends back around.
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