AEDC: economic outlook good despite gov't spending cuts
Continued good days are ahead for the Anchorage economy, at least according to the Anchorage Economic Development Corp.
AEDC President and CEO Bill Popp said the group is optimistic about the coming years and expects about annual growth of 1 percent or more in the number of jobs in Anchorage through 2017.
“We continue to set records on an annual basis in terms of the total number of jobs available in Anchorage,” he said.
Popp made his remarks July 30 at AEDC’s annual three-year forecast presentation. Alaska-based research firm McDowell Group compiled the forecast.
So far in 2014, the city has added about 570 positions across all employment sectors, nearly 0.4 percent growth. The opening of national sporting goods giants Cabela’s and Bass Pro Shops helped spur 550 new retail jobs over the first half of the year, Popp said.
“Retail is our rock star so far in the first six months,” he remarked.
For nearly a decade the number of available positions in the city’s retail industry has been virtually flat.
A repeat of 2013 seems to be in the works so far in 2014 with cuts to 600 government positions split nearly evenly between federal and local employment.
“If we didn’t have this decline in employment we would be at our number right now in terms of net new jobs (predicted) in Anchorage,” Popp said.
In January AEDC forecasted 1,200 new jobs for the year.
The transportation sector has grown by about 450 positions this year and health care has rebounded from a slower than average 2013 to add 320 jobs to date.
Business and professional services remains strong with 220 new jobs and a busy cruise season has contributed to 170 new leisure and hospitality jobs.
The loss of 870 government positions last year offset significant private sector gains. Ultimately, Anchorage ended 2013 with 315 more jobs than at the beginning of the year — 0.2 percent growth.
That decline in government jobs will need to moderate if the forecasted 1 percent overall growth is going to materialize.
Still, Popp said the ongoing challenge faced by Anchorage businesses of finding the right employees is becoming a “big headwind” for employers wishing to expand.
“We think the private sector job growth could be substantially stronger if we had more qualified candidates in the local market, but the labor pool, as I’ve said before, is a labor puddle,” he said.
While AEDC is predicting population growth of about 1 percent annually through 2017 — from 304,100 this year, to more than 313,000 in three years — Popp said most of that growth would be from within.
There is a net outflow of adults from Anchorage, he said, likely because other cities across the country have a lower cost of living.
“There are other communities in the United States that can offer a better deal,” he said. “We do not have a significant influx of people moving to Anchorage and that is something we need to pay attention to.”
As a result, a recent but slight uptick in the city’s unemployment rate is probably going to be short-lived, Popp predicted.
In June, Anchorage’s unemployment rate was 5.6 percent, up from 4.8 percent in May, but flat year-over-year, according to the state Labor Department.
“By later this summer into the fall we could see unemployment back down in the mid-4 percent range, perhaps even as low as 4.4 (percent),” he said.
Ted Stevens Anchorage International Airport is expected to remain busy, which is particularly beneficial to the Anchorage economy because it provides nearly 10 percent of city jobs.
Passenger traffic growth is forecasted at about 2 percent annually through 2017, Popp said, meaning more people than ever before will likely be passing through the airport in the coming years. By 2017, AEDC projects more than 5.5 million passengers will use the Anchorage airport.
Traffic at the airport rebounded in 2013 to nearly 5.1 million passengers after falling 2.6 percent in 2012.
Air freight volumes at the Anchorage airport — volatile over the last 10 years — will stabilize in the years ahead, AEDC predicts. Popp said global supply chains are shifting slightly away from air freight transport and are using more efficient craft that don’t need to stop in Anchorage to refuel.
Personal income is expected to continue growing at between 4.5 percent and 4.7 percent annually, Popp said. The overall total for Anchorage income could surpass $20 billion in 2017, according to AEDC; it was $17 billion last year. Contributing to the income of not only Anchorage residents, but all Alaskans, could be larger Permanent Fund Dividend, or PFD, checks.
Popp said 2009, the last poor year for the stock markets, is coming off the books for the investment fund average this year, and 2014’s PFD checks could surpass $1,500. Without specifying sources, he said some experts are predicting future dividends as high as $2,500 or more if the markets remain strong. Such cash influxes would have a “leavening effect” on fourth quarter business in the years ahead, he said.
AEDC against Ballot Measure 1
“The AEDC board urges all Alaskans to vote ‘No’ on Ballot Measure 1,” Popp said after his economic forecast presentation.
AEDC’s 31-member board of directors passed a resolution opposing the ballot referendum that would repeal the current oil production tax structure known as Senate Bill 21 at a May 21 meeting.
While AEDC is not an advocacy organization, Popp said the board felt it necessary to take a stand on this political issue because of the ramifications it feels repealing SB 21 would have on the Alaska.
“The reasons the board took this position are many but boil down to a simple view — the measure would have a chilling effect on North Slope oil and gas industry investment and employment, threatening the future and economic health of Alaska and Anchorage,” he said.
Groups advocating to repeal SB 21 contend the legislation does nothing to guarantee new investment in Alaska’s oil and gas industry by producers and it doesn’t allow the state to maximize its take of profits during times of high oil prices.
“Billions in investments in existing infrastructure over the past decade before the passage of SB 21 are more about risk reduction and cost efficiency than producing new barrels,” he said.
Years of production decline from North Slope oil fields have begun to significantly impact the state’s budget, Popp said, and recent investments aimed at producing new oil have materialized only since SB 21 was passed just more than a year ago.
He said the multiple tax regimes the state experimented with prior to the current flat tax system did nothing to stem production decline and a fourth change in production taxes will stymie investment.
Elwood Brehmer can be reached at [email protected].