Anchorage Economic Development Corporation (AEDC) hosted its annual Economic Forecast Luncheon on February 5th. The sold-out crowd of 1,600 business professionals heard from Mayor Dan Sullivan about the upcoming Centennial events in Anchorage. Bill Popp, President and CEO at AEDC then gave his 2015 Anchorage Economic Forecast presentation.
A survey of business leaders in Anchorage found that most were still optimistic about parts of Anchorage’s economy, but overall confidence in the economy had dropped and was slightly pessimistic as compared to years past. This year was the first time the confidence had dropped below 50 percent since 2010. The barriers for growth come as no surprise, with 77 percent of respondents saying the state economy is as large barrier for economic growth. Availability of a professional/technical workforce is also a large barrier, as well as the national economy. The changes to health insurance laws and the cost of labor round out the top concerns for local business leaders. In short, businesses feel good about where they are and what they are doing in 2015, but do not have the same optimism for the economy as a whole.
A brief recap of the 2014 jobs situation outlined that counter to predictions, Anchorage saw a net decrease of 400 jobs in the past year. There may be some revisions of the final numbers, but 2014 was definitely not what was predicted for jobs.
The prediction for 2015 is as follows:
- Oil and Gas- decline -100
- There are still 15,000 statewide oil and gas industry jobs and the small decline does not reflect projects being cancelled, only a shift from 2014 staffing
- Health care- growth +300
- continues to be a growing field in Anchorage
- Transportation- flat +0
- AEDC feels there could be a small bump in transportation in 2015 because of air cargo, but will wait to see if the climate remains positive for Alaskan transportation
- Professional and business services- flat +0
- Construction- decline -100
- there has been positive growth in Anchorage construction, but capital projects are decreasing, which will have an effect on the overall construction jobs number
- Leisure and hospitality- growth +100
- Retail trade- growth +300
- continues to be strong due to national retailers entering Anchorage as well as local businesses increasing their footprint
- Financial activities- decline -100
- Government- decline -500
- we will continue to see a decline in Federal jobs in Anchorage, but state government will account for a good portion of the decrease predicted
- Other sectors- growth +100
- Overall- flat +0
Everyone in the room was well aware of the issues with the state’s budget but as both Mayor Sullivan and Bill Popp noted, Anchorage’s economy is strong and this drop in oil prices is much different from the crash in 1986. Anchorage will not see a significant drop in jobs and in fact, the private sector should increase by 500 jobs this year.
We all know that much depends on oil prices and future production as well as the 2016 state budget. Alaskans need to understand that there is a lot of work to be done to build the state economy and that difficult decisions will need to be made by Governor Walker and the Legislature. This is a serious issue, but solutions for increasing revenue and curbing spending are out there. The solutions are long-term strategies and require a good, hard look at the state’s budget process for both revenue and spending.
A midyear look at the employment numbers will be provided at AEDC’s summer luncheon. For the full reports and slide show from the forecast luncheon, visit http://aedcweb.com/2015-economic-forecast-luncheon-reports-available/
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