No Easy Recovery in 2022 A forecast for more economic strain.

• Author: Simonelli, Isaac Stone
• Position: FINANCE

The pandemic stripped the varnish off Alaska's economy. The recovery from COVID-19 has been slower than expected in 2021 for myriad reasons, including stalling vaccination rates, the Delta variant, and labor shortages. The damage done to the economy also brought into focus deeper issues tied to four straight years of net out-migration from the Last Frontier.

Alaska employment numbers increased in 2021 since tumbling to about a twenty-year low in 2020. Based on preliminary data available in November, Bill Popp, president and CEO of the Anchorage Economic Development Corporation, is seeing marginal growth in Anchorage--the primary economic center of Alaska--since the pandemic first struck.

"We're up about 4,300 jobs in September overall, compared to August where we were up 5,900 jobs," Popp says. "The Delta variant definitely took a little bit of the wind out of our sails in the month of September."

Getting COVID-19 numbers under control is a top priority to Alaska's economic recovery, explains Jon Bittner, the executive director of the Alaska Small Business Development Center (SBDC). Fears about returning to work in often low-paying, public-facing positions is part of the reason that nearly 30,000 Alaskans who were working before the pandemic have not returned.

"They don't want to get COVID or they have a family member that has health issues," Popp says.

Bittner agrees that the Delta variant put a damper on the early stages of the recovery. However, he's optimistic about the general trend in 2021 and expects to see further growth into 2022.

He points toward a survey conducted in 2020 and in 2021 in which the Alaska SBDC asked business owners to predict what their financial situation would be in the next twelve months. In the 2020 survey, about 30 percent thought their financial health would be poor to very poor. About twelve months later, that number is down to 14 percent, Bittner explains.

"We're actually seeing a much stronger sense of optimism among businesses, which leads me to believe that they did better towards the beginning of 2021 than we thought they might." Bittner says.

Labor Shortage

While businesses are trying to claw their way out of the 2020 fallout, their efforts.continue to be stymied by underlying issues in the Last Frontier's economy: labor shortages resulting from years of out-migration compounded by early retirements connected to the pandemic.

"A business's ability to come back from the economic downturn is sort of...