Anchorage Economy Stable Amid Uncertainty

Berry’s colleague, senior consultant Moira Gallagher, explained that Alaska tourism is largely driven by Lower 48 consumer confidence and disposable income. Slack in those factors resulted in a 7 percent drop in passenger volume at Ted Stevens Anchorage International Airport.

Construction in Anchorage is a mixed picture, according to Berry. “Thus far in 2025, construction permitting activity has been about on par with 2024, but the composition has changed somewhat. We’ve seen residential permitting increase while commercial activity has gone down,” she said.

Rising Indicators

Amid those lower indicators, residential construction is a bright spot. Gallagher noted that multifamily permits, at 171, are near the highest level for the last several years.

Mayor Suzanne LaFrance, in her State of the City address to the AEDC luncheon, seized on the housing news. “In just the first half of this year, we’ve doubled the number of multifamily permits issued in all of 2024,” she said to applause from the crowd. The mayor added, “We’re making it easier to upgrade mobile homes with modern options.”

Gallagher corroborated the mayor’s optimism. “Policy changes like the new twenty-year tax abatement on multi-family developments as well as a temporary pause on certain design standards are allowing developers to make investments in projects they wouldn’t have ordinarily,” Gallagher said. Prices for existing homes are up, with the median rising to more than $520,000, but Gallagher noted that home sales have not yet slowed in response.

The brightest indicator is in the transportation and warehousing sector. Jobs are up by 1,000, and cargo is surging through the airport and the city-owned Don Young Port of Alaska. “Cargo volume is up this year,” Gallagher reported. “Also, at the port, we are at record highs. The tariffs, and announcement of potential tariffs, have not meaningfully reduced volume at either of these locations.” However, she pointed to month-to-month volatility in cargo volume, more variable than previous years, as reason for uncertainty.

Confidence Reading

Consequently, the survey’s measure of confidence in the Anchorage economy dipped into “pessimistic” territory. The reading of 34.2 is a drop of 15.3 points compared to last year; the AEDC index, derived from weighted indicators, is considered “pessimistic” below 45 and “optimistic” above 55.

Consumer confidence is still pessimistic but rising. “At 43.9, it’s ticked up a little bit from last year,” Gallagher explained. “The interesting thing here is—and it’s something we often see—while people are feeling not incredibly optimistic as individuals about the local economy, they are feeling—57.9 percent—very solid in their personal financial situation.”

Four other business confidence indices, however, were all lower. The Capital Expenditures Index dropped by 10.6 points to 52.9. The Gross Sales Index dropped by 9.2 points to 53.6. The Net Profits Index dropped by 6 points to 53.1. And the Employment Index dropped by 4.5 points to 51.8.

Those mildly optimistic components pulled the overall Composite Index into middling territory, down by 9.1 points from more solid optimism in 2024. Gallagher noted, “This year’s is pretty low at 49.1, but it’s not the lowest that it’s ever been. What’s really happening here is a lot of ‘wait and see’ from businesses.” The composite score for 2025 is the third lowest since AEDC began tracking it in 2009, surpassed only by 2016 and 2021, and 4.9 points below the ten-year average.

Furthermore, Gallagher added, “The businesses that responded, two-thirds of them said they thought the Anchorage economy would get worse. Concerns about the local economy were really focused on policy issues like the state budget and public safety.”

Competing with Uncertainty

Readings in 2026 or 2027 might be higher, based on developments in the tourism sector. Gallagher noted, “The capacity of cross-gulf cruise ships is expected to expand next year, as more ships come to Whittier and Seward. The opening of the new cruise ship terminal in Whittier is going to help boost cruise passenger traffic to Southcentral and, ultimately, to Anchorage.”

Pilot projects to support childcare for working families are expected to go wider in 2026, according to LaFrance. “For the first time, cannabis tax dollars are supporting the childcare sector through a dedicated fund approved by Anchorage voters,” the mayor said to applause. “Right now, these funds are helping providers stay open, they’re improving worker retention, and most importantly [they’re] expanding access so parents can stay in the workforce.”

AEDC had been advocating for a local sales tax, partly to offset Anchorage property taxes but also to invest in quality-of-life improvements for the city. The Anchorage Assembly declined to pursue the idea, but AEDC Board Chair Michelle Klouda said AEDC continues to support the campaign. Klouda was speaking in the place of AEDC President and CEO Jenna Wright, who is on extended leave while undergoing cancer treatment.

In her keynote address, Daly suggested strategies to cope with economic uncertainty. One strategy, naturally, is diversification. “That’s a word I’ve heard so frequently that it’s competing with ‘uncertainty.’ In all my dealings with you, everyone talks about diversification,” Daly said. She advised that economic diversity does not mean abandoning core sectors; rather, it means investing in additional industries as a hedge when times are uncertain.