Anchorage businesses reported a sharp decline in overall confidence in a new survey from the Anchorage Economic Development Corp.
This year’s composite index decreased by 9.1 points from last year, according to the Business Confidence Index Report, and is 4.9 points below the 10-year average. The index score is determined by five indicators: the Anchorage economy, gross sales, net profits, employment and capital expenditures, which all saw declines.
McKinley Research Group conducted the survey, which gathered responses from over 170 local businesses. At the corporation’s annual economic summit in Anchorage at the Dena’ina Civic and Convention Center Wednesday, Moira Gallagher, a senior consultant for the group, said it’s the third lowest score since the corporation started tracking this data in 2009.
“What's really happening here is a lot of wait and see from businesses,” she said. “This is neither optimistic, nor really pessimistic, but just feeling a lot of uncertainty about both national level and local policies.”
Less than a quarter of businesses said they expect the Anchorage economy to be better this year compared to last, while 66% said they expect it to be worse. But Gallagher said one bright spot in the report is that consumers are feeling slightly more optimistic than last year.
“Broadly, there's uncertainty and a little pessimism about the local economy, but as individuals and households, around 60% of them are feeling okay,” Gallagher said.
Federal policy changes are weighing on business decisions, according to the report, which says economic uncertainty is causing owners in Anchorage to delay investment and expansion plans. The report says some organizations are actively cutting budgets and diversifying funding, but many are waiting to see how policies unfold.
Many businesses said they expect to be harmed by tariffs, according to the survey, along with cuts to federal grants, spending and staffing reductions.
Tariffs will have a ripple effect through the state’s economy, Gallagher said.
“In addition to those impacts to us as individuals and families, the tariffs will also have a dual impact on the Alaskan economy, and that's in cargo volume and in construction costs,” she said. “As a large air and marine cargo hub, we see a lot of volume that passes through, but we may see a reduction in that volume if, as is expected, tariffs result in reduced consumer spending.”
She said tariffs haven’t yet led to cargo declines at the port or airport, but are causing volatility.
Most Anchorage businesses that responded expect the local economy to be “much worse” than last year, according to the survey. The report also shows a sharp decline in the number of businesses planning to increase capital expenditures, while nearly a quarter plan to constrict spending.
Businesses ranked reducing homelessness as the most important issue for the Anchorage economy, followed by affordable housing and the sustainability of the state budget.
