New Anchorage economic forecast paints a grim picture for the next 3 years


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Anchorage’s economy will not regain its pre-pandemic position, even within three years, as personal income, consumer spending and unemployment struggle to emerge from the hole dug by the coronavirus pandemic, a new report projects.

After three straight months of unprecedented unemployment and on top of a multi-year recession, employment in Anchorage will slowly pick up from next year, according to the three-year outlook released Wednesday by Anchorage Economic Development Corp.

But even in 2023, they will remain below last year’s employment levels of more than 4,200 jobs, according to the report.

Bill Popp, president of AEDC, called the details “a sea of ​​bad news.”

The annual forecast, led by the McDowell Group for 13 years, lists the timing of a possible COVID-19 vaccine as one of multiple caveats that could affect future numbers, given the unfamiliar path of an economy hit by a pandemic.

Popp said the research group had deepened the details from previous years, acknowledging the severity of the crisis after falling oil prices and the unemployment rate in Alaska reaching record highs above 12%.

For weeks, more than 60,000 Alaskans received weekly employment benefits, or about 17% of the workforce, according to state figures.

Anchorage is expected to lose more than 11,000 jobs by the end of the year, Popp said.

“Historically, there is no year in modern Anchorage history that comes close to the magnitude of these job losses in a single month or a single year,” he said.

In addition to the 6,000 and more jobs lost during the city-wide recession, Anchorage has lost more than 17,000 jobs since 2015, he said.

“This is a staggering figure to understand. Indeed, all the job gains we have seen since 2001 have now been wiped out,” he said.

As a result of the pandemic, total personal income in Anchorage will rise from last year’s high of $ 20.1 billion to $ 19 billion this year, he said.

The figure is expected to rise to $ 19.6 billion in 2023, according to the report.

“Unemployment, business closures and slowing economic activity will lower wages, wages and income class of homeowners,” the report revealed, although emergency government assistance will provide a boost. aid.

The pace of the city’s recovery will depend in part on help from Congress, the report said. Lawmakers are now debating whether to provide additional help as many federal benefits run out.

With indoor business meetings in Anchorage currently limited to 15 people, The AEDC released the annual report in a virtual meeting on Wednesday. More than 1,200 people have registered for the presentation online, Popp said.

On the bright side, the report found that approximately $ 500 million in federal aid has flowed into Alaska to help strengthen business and personal accounts.

There are bright spots, at least this year, Popp said:

• The value of single-family homes is expected to reach a record $ 385,000 on average, up $ 10,000 from last year, amid historically low interest rates and a shortage of homes for sale as relocation plans halt amid uncertainty. House values ​​are not estimated for future years in the report.

• Air cargo volume at Ted Stevens Anchorage International Airport jumped by a surprise 15% in April, May and June, compared to the same period last year. Many international passenger flights that previously carried cargo have been grounded, increasing cargo traffic for the time being, according to the report.

• The federal employment sector will see an increase this year, with around 100 additional jobs thanks to hiring for the 2020 US Census.

But “every other industry has lost jobs (this year),” Popp said.

Changing habits in the midst of the pandemic will have long-term consequences for business operations. The report provides:

• More people will be working from home, limiting demand for commercial and retail space.

• Out-of-state tourists will remain wary of travel, continuing to hurt businesses that depend on summer sales.

• Private sector investment will remain constrained for several years.

The report found that consumer spending has fallen 15% since January, compounding problems for an economy struggling with cruise ship cancellations and restrictions on restaurants, bars and other businesses.

[Alaska Airlines expects to lay off more than 300 workers in Anchorage]

Job losses from the pandemic and a faster recovery in Lower 48 could help reduce Anchorage’s population each year through 2023, continuing a long-term trend that has helped shrink the labor force.

Job losses in health care will not pick up again until 2023, and oil, gas and transportation before 2022, and barely even then.

The gross value of oil production, critical for state revenues, will reach just $ 7.2 billion this year, less than a third of the value of production a dozen years ago .

[‘I can’t afford to shut the doors again’: Anchorage restaurants and bars face another round of COVID-19 restrictions]

The leisure and hospitality sector, made up of bars, restaurants and hotels, is the industry most affected, according to the report.

Jobs in this sector are expected to end the year down by more than 5,000. That’s a quarter below 2019 employment levels.

Even in 2023, the sector will have around 2,500 fewer jobs than pre-pandemic levels, according to the report.

Some restaurants are likely to close. Others may not regain their full reception capacity without “a fully vaccinated population,” the report warns.

Even in 2023, jobs in retail, construction and government will all remain below 2019 levels, according to the report.

Construction spending will benefit government plans, including improvements to schools following damage from the 2018 Anchorage earthquake and federally funded projects to improve infrastructure.

Mayor Ethan Berkowitz, speaking at Wednesday’s meeting, said the Anchorage Municipality’s financial position remained strong, an indicator of positive future investments.

Popp also said new oil discoveries on the North Slope promise hope for the future and new jobs as they develop.

“We are in very difficult times, but they are not insurmountable,” he said.

“We can overcome this catastrophe and get back on the path to economic recovery,” he said. “But it will be a long journey. It took us years to get to where we are today and it will take us years to bring the Anchorage economy back to where we started.

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