Diversification key to Anchorage's growth.

• Author: McCracken, Jon
• Position: Anchorage, AK

Despite low oil prices and imminent layoffs by the oil industry, the Anchorage economy will see growth this year due to increased employment in other industries. All combined, the economy will likely grow an estimated 2 percent during 1999 according to an AEDC forecast.

In one of the more decisive years of economic growth, the Anchorage economy has shown that diversification does matter.

As most Anchorage residents are aware, 1998 was a tough year for several natural resource markets. Prices for oil, seafood, timber and gold were significantly lower than those of the previous year. In addition, several of Alaska's key Asian trading partners suffered from an economic slow-down, adding further pressure to essential natural resource markets.

Yet, the Anchorage economy has defied history by pumping out thousands of new jobs in the past year. Overall, the economy grew a healthy 3 percent, adding an estimated 3,750 new jobs. At the same time, the unemployment rate dropped to a record low of 4.4 percent.

Peering into the future for the Anchorage economy, 1999 will be another crucial year. Again, natural resource prices will likely remain depressed throughout 1999. Several key Asian trading partners will show little or no economic growth over the next year. Despite this, the Anchorage economy is expected to grow this year by 2 percent and an estimated 2,500 jobs.

Construction

Experiencing one the strongest construction years since 1984, the industry has been busy building houses, apartments, hotels, cinema theaters, car showrooms, and manufacturing plants, to name just a few.

All combined, roughly $500 million was spent in Anchorage on commercial and residential construction projects in 1998. This represents an approximate 25 percent increase in commercial activity for 1998, compared to 1997. Employment levels for the construction industry are also showing signs of strong growth. Compared to 1997, the construction sector added 400 new jobs in 1998.

Looking ahead, construction should continue unabated. The Anchorage Economic Development Corp. forecasts commercial construction to expand an estimated 20 percent for a total of $260 million, while residential construction is estimated to grow an additional 13 percent for a total of $327 million.

All combined, construction is forecasted to grow by 16 percent for a total $587 million this year. Paralleling the expansion in construction projects, AEDC also anticipates strong employment growth in the...