Anchorage economy in better shape than forecast

Posted: Thursday, July 31, 2003

ANCHORAGE (AP) Anchorage's economy is shaping up better than forecasters had thought it would this year, thanks in part to greater-than-anticipated strength in services industries such as health care, banking and business consulting.

The Anchorage Economic Development Corp. raised its forecast for job growth, predicting 2,100 new jobs this year, up from a forecast in January of 1,750. About 1,800 will be services job, the AEDC predicted.

The health care industry, one of the fastest-growing and larger segments of Alaska's economy, will lead the way, adding about 1,000 jobs this year, University of Alaska Anchorage economist Scott Goldsmith said Wednesday. The AEDC's economic forecast is based on Goldsmith's research.

So far, Goldsmith said, developments that accelerate job growth have been stronger than he expected last winter.

Federal spending has been particularly strong, with increases in spending on construction as well as government operations, Goldsmith said.

Earlier this summer, local economists were taken aback by new figures from the U.S. Census Bureau that tallied federal spending in Alaska last year at $7.6 billion, a near 19 percent increase from 2001.

Federal spending on construction projects helps boost growth in a range of industries, not just construction.

''It also creates demand for business services, wholesale trade, transportation and finance,'' Goldsmith said.

Although the national recession appears to have ended, jobs growth nationwide has lagged behind the economic recovery.

That has kept interest rates at historical lows and has been a boon to Alaska businesses and consumers who want to borrow or refinance existing debt, Goldsmith said.

''It has also been good for the Alaska labor market, as more Alaskans have chosen to stay home rather than look for work in other states suffering through continued job losses,'' he said.

When Goldsmith made his initial jobs-growth forecast for the year, there were several wild cards that could have tipped the economy one way or the other: the state's budget gap, oil prices and the possibility that the Alaska Permanent Fund would not earn enough profit to pay a dividend.

But high oil prices and $140 million in budget vetoes helped to shrink the gap between state revenue and spending. Meanwhile, an upturn in the stock market came just in time to ensure that there would be a $660 million permanent fund dividend payout to Alaskans this fall, Goldsmith said.

Some segments of Anchorage's economy, oil and manufacturing, are expected to lose jobs.

The absence of large-scale oil field development, competitive pressures and uncertainty about future market conditions have been winnowing the number of jobs in that industry. This year, the AEDC expects 200 oil jobs to be lost in Anchorage, following a 400-job decline last year.

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