Economy faring well amid uncertainty says AEDC
Anchorage’s economy is doing better than expected based on job growth reported by Anchorage Economic Development Corp. CEO Bill Popp.
The city added about 1,000 jobs in June based on a new U.S. Department of Labor calculation. Private sector employers added 2,200 jobs for the month, according to Popp.
The job market was strong through the first half of 2015, despite depressed oil prices.
“Oil and gas, in direct employment, is up 500 jobs (statewide) according to the new Department of Labor numbers, so we are seeing some very positive indicators in the overall numbers mainly driven by private sector growth,” Popp said.
He made his remarks at AEDC’s annual three-year economic forecast luncheon July 29.
While Anchorage’s job market ended 2014 below forecast — losing about 690 jobs — so far 2015 is outpacing AEDC’s prediction of a flat market.
Most of the job losses last year were attributed to contracting government workforces at the federal and local education levels, Popp said.
Losses in the business and professional services portion of the private sector in 2014 should flatten out this year. Those jobs were lost in large part due to less need for engineering and design services, a result of slightly less capital construction spending, he said.
The health care industry is expected to continue to grow because the State of Alaska is poised to accept Medicaid expansion funding from the federal government starting Sept. 1.
June unemployment in the city was 5.5 percent, the lowest it has been during the month in eight years, according to the AEDC forecast report.
Popp said unemployment could drop near 5 percent, which is considered full employment, or less by the end of the year.
“That is a great unemployment rate,” he said.
As wages go, Popp said Anchorage is still better than the national average, but the delta is shrinking. Much of that could be related to an improving Lower 48 economy, which is driving wages up in most of the country.
Average wages in Alaska are typically some of the highest in the nation, the direct result of high cost-of-living expenses.
AEDC’s employment forecast for the entirety of 2015 has Anchorage adding 730 jobs, or about 0.5 percent growth. That would give the city a record of 155,800 jobs.
The size of Anchorage’s workforce will mirror its population over the next several years, according to AEDC.
This year, the city is expected to peak at 302,000 people, similarly up 0.5 percent from 2014, and a record number of Anchorage residents.
Recently announced force reductions of 2,600 Army personnel from Joint Base Elmendorf-Richardson could begin to drop Anchorage’s population back below 300,000 in 2016, with a leveling out at 297,500 people in 2017 and 2018. The overall population decline includes the roughly 3,500 spouses and children that could leave with the active-duty personnel.
“We’re trying to engage our friends and neighbors in the military to stay in Anchorage and fill many of the jobs that are currently going unfilled for lack of qualified or available candidates,” Popp said.
AEDC expects the Anchorage workforce to hold steady at 155,800 in 2016 and shrink slightly to 155,000 workers in 2017 and 2018, following the track of population projections.
Considering low oil prices and contracting government spending, the outlook is fairly positive, and projections are good for Anchorage’s primary industries despite the tepid job market.
Passenger volumes at Ted Stevens Anchorage International Airport are expected to match the 2008 record of more than 5.3 million people and climb steadily each year to nearly 5.7 million in 2018.
Those are promising numbers for both the airport and the city’s tourism industry, which combine to account for roughly 20 percent of direct and indirect employment in Anchorage, Popp noted.
The air cargo business at the Anchorage Airport should also return to banner years of record volumes over the next several, according to AEDC. Roughly 3 million tons of cargo is expected to move across the tarmac at TSAIA this year for the first time since 2007. By 2018, 3.5 million tons is expected due to lower fuel prices and larger Boeing 747-800 and 777 aircraft capable of carrying heavier loads from Asia markets.
Popp said, however, that the larger aircraft could mean fewer landings and in-turn some lost revenue for the airport.
Freight volume at the Port of Anchorage is projected to follow a similar, growing trend.
Collective personal income should continue to rise as well, Popp said. This year, AEDC expects Anchorageites to take home $18 billion, up about 3.5 percent from a year ago. That growth over the next several years could see personal income in the city hit $20 billion in 2018.
A chunk of that income this year will come from the Permanent Fund Dividend checks deposited in October. Another large check — AEDC is projecting it near $2,000 per Alaska resident — should add $540 million to bank accounts in Anchorage. A discretionary spending bump reliably follows deposits in a large PFD year.
Elwood Brehmer can be reached at [email protected].