Anchorage job market expected to recover to pre-pandemic levels in 2025

After the city saw a sharp dip in local employment in 2020, Anchorage’s job market is expected to recover this year to pre-pandemic levels, according to an economic forecast released Wednesday by the Anchorage Economic Development Corp.

And moderate wage growth is expected to drive up personal income overall for Anchorage residents, while inflation will continue to decline nationally this year, the report says.

But amid the bright spots, the report outlines significant pressure points hampering the local economy: spiking housing costs, slow residential construction, declining numbers of working-age residents and an impending natural gas shortage.

In 2024 “the city added thousands of jobs, our incomes increased, and our population even edged higher for the first time in many years,” said AEDC president Jenna Wright, presenting the report’s findings to a gathering of business and city leaders on Wednesday.

[Read the full AEDC economic forecast here]

This year, “we expect over 3,000 more jobs to be added, personal incomes to rise, inflation to finally stagnate and we expect another busy construction, tourism and cargo transportation season,” Wright said.

The forecast has been put out for more than two decades and is created by McKinley Research Group. Here are some of the report’s other highlights:

• The construction industry had a “remarkable” 2024, Wright said.

Of all industries, that sector saw the biggest employment growth in 2024, up about 17%, an additional 1,300 jobs. Growth is expected to continue this year by about 500 jobs, according to the report.

The report attributed the growth in part to the $8 billion awarded to Alaska organizations under the federal Infrastructure Investment and Jobs Act.

The city is also seeing some major local investments, with the renovation of the Aviator Hotel in downtown, NorthLink Aviation’s cargo terminal construction, and the Alaska Native Medical Center’s emergency room expansion and building of a new skilled nursing facility.

“Just these four projects are bringing in a combined $570 million in investment to our community in the next two years,” Wright said.

• Jobs also grew in the health care, government and transportation sectors, and more growth is expected in the oil and gas industry as new North Slope oil field developments come online.

But a labor shortage is hampering more employment growth.

That shortage is caused, in part, by a shrinking workforce. The city’s population is aging, with annual deaths increasing and fewer babies born.

About one in four Anchorage jobs are held by nonresidents, with about half of those people from other cities in Alaska, and the other half from out of state.

While health care added more than 1,000 jobs last year, the growth is far outpaced by a need for several thousand more nurses, Wright said.

• The city’s population grew slightly last year — 0.2% — and is expected to hold steady over the next five years, the report said.

“This really is representing kind of like the glimmer of a turning point and finally offers some stability for our population numbers” after eight years of decline, Wright said.

• After several years of significant increases, inflation slowed in 2024. Meanwhile, personal income has grown among Anchorage residents.

Personal income rose 7.5% from a total of about $22.7 billion in 2023 to an estimated total of $24.4 billion in 2024, according to the report.

“Last year’s growth finally outpaced inflation, meaning residents experienced a real increase in their household bottom line,” Wright said.

Work-related income is expected to increase again this year by about 2.5%, but will be offset by an anticipated 2.5% rate of inflation.

Though incomes have risen, prices remain high, and many Anchorage households have faced affordability challenges in recent years, the report said. Costs for medical care, energy and rent have all increased significantly.

Due to the Cook Inlet gas supply shortage, importing natural gas is likely to drive up inflation locally in the coming years, the report said.

“We are closely watching the supply of Cook Inlet natural gas as it will play an important role in energy prices and subsequent inflation here locally,” Wright said.

• Housing prices have soared in Anchorage, and residential construction remains dismally low. The average sales price of a single-family home was up 40% from 2019, costing almost $514,000 last year, according to the report.

In 2024, the city issued just 237 construction permits for residential units, including single family homes, duplexes, triplexes and fourplexes.

Speaking during AEDC’s Wednesday event, Anchorage Mayor Suzanne LaFrance emphasized that her administration aims to make it easier to build housing in the city. More housing availability will help to solve problems like outmigration and homelessness, she said.

To alleviate Anchorage’s housing crunch, about 1,000 new housing units need to be built yearly for the next 10 years, LaFrance said.

• Between Ted Stevens Anchorage International Airport and the Don Young Port of Alaska, “the transportation industry continues to be a behemoth in the economy,” Wright said.

The forecast found that air cargo volume hit a record high of 3.7 million metric tons last year, and with the addition of new carriers, another record year is anticipated, Wright said.

The port similarly saw a record year for cargo volume at 5.5 million tons, she said. The historic volumes are predicted to continue this year.

The amount of cargo has translated into record numbers of workers, with the industry hitting 13,000 jobs last year, Wright said.

The city is currently working to modernize the port’s aging infrastructure.

”It must be rebuilt or it will fail, and the cost of doing nothing is too high,” LaFrance said. “Trying to match its capacity through air or truck transport would cost Alaskans $40 million a week to prevent catastrophes.”

Recently approved tariffs will help pay for the construction of new cargo docks. Those tariffs will have little economic impact on Anchorage residents this year, the report says.