AEDC’s 2023 Forecast: ‘No Signs of a Looming Banana’
“I’m not yet concerned about a banana,” Bill Popp told the luncheon crowd listening to his annual forecast from the Anchorage Economic Development Corporation (AEDC). Popp spoke in code for fear of summoning the devil of recession. Although AEDC’s president and CEO is upbeat about the coming year, the city’s economy is so delicate that whispering the wrong word might knock it off balance.
Confident, Not Exuberant
The forecast, compiled with the assistance of McKinley Research, anticipates 1,550 new jobs added to Anchorage’s workforce, for a total of 145,550. That would be half of the growth of 2022, though Popp notes that every industry sector is growing, at least.
“AEDC is solidly optimistic for the Anchorage economy in 2023,” Popp said.
Inflation peaked in 2022 but is dropping, so he believes rising prices will be less of an issue in 2023. Popp also points to Anchorage’s unemployment dropping to a historic low of 3.7 percent. “If you’re a worker looking for a job in Anchorage, you can find one pretty easily,” he said. “If you are an employer, finding candidates to fill your open jobs will likely continue to be a difficult proposition in 2023—likely more difficult than it was in 2022.”
AEDC’s Business Confidence Index reached its second highest level ever, and businesses report higher profits than ever. “The Anchorage business community is confident in an overall good year in 2023,” Popp said, “but I would not characterize this confidence as exuberant.”
The quarterly survey of consumer optimism, however, declined to a record low.
“We believe that one of the key drivers is likely a combination of a drumbeat of negative news,” Popp said, “combined with a growing view that, in recent years, nothing ever seems to change when it comes to the big issues, like the state fiscal crisis, housing, homelessness, and many other challenges our city and state have been facing for years. I say again: years.”
Popp adds that consumers and businesses are both more favorable about their personal finances than the overall picture. When someone else is driving the economy, passengers tend to get anxious. But Popp said there’s nothing to fear.
“I do not yet see any signs of a looming banana on the near horizon for the Anchorage and Alaska economies,” he said, “but we do have significant challenges to deal with.”
Anchorage Mayor Dave Bronson told the luncheon crowd that a housing shortage is hurting the city’s ability to attract and retain workers. The Business Confidence Index corroborates that observation, finding that affordable housing and homelessness are the top concerns of more than 70 percent surveyed, along with attracting a workforce.
Houses are hard to find even though fewer people are living in the city. Anchorage lost 600 residents in 2022, some to the Matanuska-Susitna Borough and other parts of Alaska, while others left the state for good.
Popp said AEDC is developing strategies to market to the Lower 48, starting with former Alaskans. He said demographic data shows where they’ve moved, so a marketing campaign will “appeal to the expectations of the kinds of workers that we’re trying to attract and their families.”
The population that remains in Anchorage is aging, such that one-quarter is 55 and older. More than 14,000 working-age adults have moved away since 2015.
“We are losing working age adults at a rate that is one and a half times faster than the losses from total population,” Popp said. “This loss of working-age population is the most significant cause of our growing labor shortages and is the most significant challenge our economy is facing today.”
To address that challenge, AEDC unveiled its new Choose Anchorage campaign.
A year ago, AEDC sought grant funding to respond to a report by Roger Brooks International that used “secret shoppers” to evaluate Anchorage as a destination for visitors and businesses.
The funding paid for TIP Strategies, a consulting firm based in Austin, Texas, to create the Choose Anchorage action plan. The result is nineteen strategies to address four goals: business vitality, talent, quality of place, and infrastructure.
The recommendations for business vitality, talent, and infrastructure incorporate initiatives that AEDC, the municipality, and many businesses are already doing. What the plan adds, said TIP Strategies senior partner Jeff Marcell, is collaboration. “It’s a method to break down silos, so that everybody in this community understands who’s doing what, and you can all pull in the same direction,” Marcell said.
“It addresses both existing efforts that need more resources and more collaboration, more backing, as well as many new strategies,” adds Popp, “looking at it from new, innovative, and collaborative ways.”
The boldest strategies are toward the goal of “quality of place,” which contrasts with “quality of life,” according to TIP Strategies senior vice president Alex Cooke. “To us, ‘quality of life’ tends to reinforce the values of the existing community, existing population; ‘quality of place’ not only looks at the values of the existing population but also takes into account the attributes, the amenities, the things that somebody that’s not from this community is going to be looking for and would think is desirable,” Cooke explains.
The “quality of place” strategies address housing and the homeless, downtown revitalization, marketing the city’s recreation opportunities, and “place-making,” such as wayfinding, beautification, public space activation, and delineating the city’s districts. Cooke acknowledges that these strategies largely follow the recommendations from the Roger Brooks International report.
Cooke adds, “This should not be viewed as a static document, that we must abide by every single recommendation for the next five years, the next ten years.”
AEDC board chair Laura Edmondson warned the luncheon that the Choose Anchorage plan itself will not effect change. “It’s not something that you simply put on the shelf,” she said. “It will require action and collaboration from a broad cross-section of organizations and businesses.”
AEDC has already taken the step of forming a Choose Anchorage leadership committee. One member, Michelle Klouda of RIM Architects, welcomes the plan as a combination of ongoing initiatives plus future projects. “When we look at Choose Anchorage in that perspective, we have already started executing some of the recommendations in the plan,” she said. “The other unique part of Choose Anchorage is that we have a group of leaders, many from the private sector, that are dedicated towards making this happen.”
Never Say Never
“This is not ‘one plan to rule them all,’” Popp adds. “This is a plan that celebrates other initiatives.”
Indeed, Mayor Bronson announced at the luncheon that the administration is reviewing recommendations from the “Project Anchorage” task force, which was his response to the Roger Brooks International report. That panel put forward priorities for changes, and the administration will present those to the Anchorage Assembly as policy proposals.
Bronson noted that the Assembly is already working on an ordinance to facilitate accessory dwelling units, also known as “in-law apartments,” to add housing on existing residential lots.
The mayor stated his belief is that government must get out of the way of the private sector, yet Popp noted that absence of government is also an obstacle. Hiring in the public sector is suffering as much as, if not more than, private businesses. “In all departments, key services provided are becoming less reliable to the private sector,” Popp said. “Permitting processes, project development and management, background checks, delivery of educational services, and other key government functions are seeing increased delays and shortcomings in service delivery due to lack of staff. This is a subtle drag on the overall economy.”
Government attempts to boost the economy through federal infrastructure funding may not be the jackpot that Alaska was hoping for. The AEDC forecast anticipates less local benefits simply because there aren’t enough designers or builders to handle the projects without sourcing those services from out of state.
The state-owned Ted Stevens Anchorage International Airport is a bright spot, though. Popp credits the airport with driving much of the transportation, warehousing, and utilities sector, the only one to fully recover all jobs since the 2014 statewide economic banana.
Knock on wood. Ever cautious, Popp said, “Never say never when it comes to a potential banana.”