Alaskanomics

3-Year Economic Outlook Luncheon Recap

Over 1,000 people gathered for lunch today to hear the Anchorage Economic Development Corporation’s (AEDC) annual 3-year Economic Outlook. The program started with Anchorage Mayor Dan Sullivan sharing a few things about Anchorage’s current economic climate. He was proud to announce that Anchorage had just been named the 9^th best city to live in for 2013 by Kiplinger.com. He also noted that Anchorage has had a budget surplus for four consecutive years and seen its bond rating increased to AA+. Both of these accomplishments speak to the strength of Anchorage’s economy and labor force. Sullivan also highlighted that Alaska was ranked 5^th for entrepreneurial opportunity. Mayor Sullivan wrapped up his presentation with information about upcoming projects for Anchorage and left with encouraging remarks about the state of Anchorage’s economy.

Bill Popp, President & CEO of AEDC, continued the presentation by sharing the 2013 jobs update. In 2012, Anchorage saw an increase of 3,400 jobs, which represents 2.2% growth. The largest growth was seen in professional and business services. Through June 2013, we saw a 1.0% growth with 1,600 new jobs. He continued with the complete results of the 3-year outlook which looks at everything from population statistics, employment numbers and important pieces of the Anchorage economy, including air passengers, freight and building permit values.

A few highlights from the presentation show that Anchorage’s population numbers have been steadily increasing after a small dip in 2007 & 2008 and look to top 300,000 in 2013. Employment numbers are also on a steady increase and are predicted to grow at a rate of 1-1.5% over the next three years. Both air passengers and air freight saw a dip in 2009, but have been steadily increasing in the past four years. Building permit values have also seen an increase in the past few years and the increase looks to continue for the next three years. The forecast was mainly positive and it looks like Anchorage will continue to have a strong economy, but Popp warned that the low level of unemployment and high cost of housing will make it difficult to find and keep strong employees.  

Popp concluded his portion of the presentation with notes on the Anchorage Consumer Optimism Index which measures the level of confidence that residents have in the local economy. Through quarter two of 2013, Anchorage residents show relative confidence at 61.4%. This is higher than the past few years and is continuing to increase. Consumer confidence is a good indicator of economic strength. Anchorage’s short-term forecast is strong and it is a good time to be in Anchorage. The municipality has its challenges, but many see those challenges as opportunities for growth.  

To conclude the luncheon, guests heard from Gallup Chairman & CEO, Jim Clifton, who shared his thoughts on the current business climate. He also shared stories from his career and encouraged attendees to focus on the promise of entrepreneurs as the way to grow the US and global economy.

For the full presentation from today’s luncheon, please visit www.aedcweb.com.

Unemployment Rate at 6.1 percent in June

The Alaska Department of Labor released its monthly unemployment numbers today and Alaska is still well below the national average. The seasonally adjusted rate for June was 6.1%, up two-tenths of a percentage point from May. The national average remained unchanged at 7.6%. Alaska has remained below the national average since 2008.

Rates increased over last month in 20 of 29 boroughs and census areas. Those that did not see an increase have highly seasonal economies that depend on fishing and tourism. Bristol Bay Borough and the Municipality of Skagway had the lowest rates in the state, tied at 1.8%. The Wade Hampton Census had the highest rate at 25.4 percent.

Make it Monday Forum Re-cap

Yesterday’s Anchorage Chamber of Commerce’s “Make it Monday” forum was titled A Good Home is Hard to Find. Bill Popp, President of Anchorage Economic Development Council, began the panel discussion by discussing the current economic conditions in Anchorage, including Anchorage’s ranking in the annual Cost of Living Index. Out of 307 cities in the national survey, Anchorage ranks 20^th in both cost of living and cost of housing.  

Art Clark, Vice President of Real Estate Brokers of Alaska, continued with the historical trends for home prices and numbers of listings. The average number of homes listed in a year is lower than it was in 1995, and the average list price has doubled during that same time period.

Jerry Weaver, community development director for the Municipality of Anchorage, and Daniel Delfino, with Alaska Housing Finance Corporation, concluded the discussion by noting that Anchorage has a strong rental market, but new construction of unrestricted multi-family rental housing is relatively modest.

The Anchorage Housing Market Analysis shows that there is not enough buildable land to accommodate future housing demand (2010-2030) under historical development patterns, current land-use policies and development options. It also notes that building mid-rise residential and mid-rise mixed-use rental development is not financially feasible in current market conditions. The full report, written by the McDowell Group and ECONorthwest can be found at http://www.muni.org/Departments/OCPD/Planning/Documents/Anchorage%20Housing%20Market%20Analysis%20Summary%20Report.pdf

The panel agreed that Anchorage is facing a significant challenge for affordable housing and that there is no easy answer. Not only is there a problem, but the outlook is getting worse and housing affordability impacts overall economic growth and business opportunities. Luncheon attendees were asked to become more educated about the problem; become involved in potential solutions, work to collaborate with others and join the conversation to bring light to the challenge of affordable housing in Anchorage.

The slides from Monday’s presentation can be found at http://prezi.com/_mfpwboermpx/make-it-monday-a-good-home-is-hard-to-find/

The Pebble Project: Economics and Employment

A recent economic impact study conducted by IHS Global Insight cites the potential for 15,000 Alaska and US jobs during operations of the Pebble Project. This is to include nearly 5,000 jobs in Alaska alone during the construction phase, which is slated to take 5 years. The study, commissioned by the Pebble Limited Partnership, outlines the potential economic benefit for the state of Alaska and includes national economic benefits as well.

To view a Pebble deposit economic infographic, visit http://www.visualcapitalist.com/the-pebble-project-economics-and-employment.

The full version of the IHS Global Insight's report The Economic and Employment Constributions of a Conceptual Pebble Mine to the Alaska and United States Economies can be accessed at http://corporate.pebblepartnership.com/files/documents/study.pdf.

Alaska residential mortgage foreclosure and delinquency rates remain some of the lowest in the U.S.

The recently released survey by the Mortgage Bankers Association shows that Alaska continues to have some of the lowest levels of foreclosures and delinquencies on residential mortgage loans in the United States.  In the first quarter of 2013, Alaska ranked 3^rd best in the nation out of 50 states in foreclosures and 4^th lowest in mortgage delinquencies of all loan types.

The total inventory of foreclosures in process is 1.1% in Alaska, while the country has a much larger lingering foreclosure inventory at 3.6% due to higher rates during the recession and longer resolution times.  These rates are the same as a year ago in Alaska, but nearly a 1% improvement for the U.S. as whole.

Delinquent loans are more than 30 days past due, but not yet in foreclosure. Alaska is fourth best, slightly behind North Dakota, South Dakota and Montana in the overall level of delinquent loans.  Alaska’s delinquency rate is 3.7%, while the U.S. average is 6.8% for all loan types.  The rate is virtually unchanged in Alaska from a year ago, but is a 1.3% improvement from the worst delinquency level of 5% in the third quarter of 2010.  The U.S. delinquency rate has also been trending downward from its worst point of 10.4% at the end of 2009 to its current 6.8% rate.

Subprime lending to traditionally non-qualified borrowers was a large contributing factor to the national mortgage problems.  The survey covers just over 93,000 mortgages in Alaska.  6,650 of these mortgages, or 7%, were considered subprime, compared to 10% nationally.  The rate of delinquencies and foreclosures on subprime loans is significantly higher.  However, Alaska is in a far better position and again leads the nation as having the lowest level of foreclosures and delinquencies in this important category.  Subprime foreclosures in Alaska are at 2.5% while the national average is 10.8%.  Alaska’s subprime delinquency rate is 10.3% compared to the national average of 20%.