Change of opinion: AEDC projects 3 more years of recession in Anchorage

With the possibility of massive state budget cuts still looming, the Anchorage Economic Development Corporation says it expects a recession to continue in Alaska’s largest city for another three years or more.

That’s a major reversal of opinion from January, when the AEDC was projecting Anchorage’s recession — already a three-and-a-half-year backward slide for several economic indicators — would end by now.

AEDC president Bill Popp presented a report compiled by the McDowell Group to business leaders Wednesday in downtown Anchorage.

“We look at the numbers for future expectations,” Popp said. “Where is the economy going? It has dropped precipitously.”

The McDowell Group report says, “Significant cuts to the State budget, as they stand now, essentially eliminate any chance of economic recovery…” and cites a decline in government jobs, including at the University of Alaska, and for health care sector jobs due to Medicaid spending cuts.

The recession started with collapsing oil prices, and Anchorage had been steadily recovering from those job losses, Popp said. But he and the McDowell Group report say the oil recession in Alaska was followed by a “policy-induced recession,” driven by the state government’s inability to come up with a long-term fiscal strategy. That has led to uncertainty in the business community about whether to invest, Popp said.

The AEDC report says funding cuts from Governor Mike Dunleavy’s line-item vetoes will exacerbate the recession.

Popp said the new projection of three more years of recession in Anchorage is based on several economic indicators and considers hundreds of millions of dollars in state operating budget funding hanging in the balance, awaiting a second opportunity for Gov. Mike Duneavy to veto some or all of it.

“This can change tomorrow, this can change again in a week, this can change again in a year,” Popp said. “There are any number of variables at play, they are all pretty much rooted in the policy decisions that are under debate in Juneau.”

The report forecasts a net loss of 700 jobs this year in Anchorage and a thousand next year. Popp says that would bring the city back to roughly the same number of jobs in the year 2007.

Editor’s note: Bill Popp is a member of the Alaska Public Media board of directors.

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Casey Grove is the host of Alaska News Nightly and a general assignment reporter at Alaska Public Media with an emphasis on crime and courts. Reach him at