Hundreds of people attended the Anchorage Economic Summit luncheon presented by the Anchorage Economic Development Corporation at the Dena’ina Center on Wednesday, Aug. 6, 2025. (Bill Roth / ADN)
Anchorage businesses are less confident than they have been since the pandemic, as President Donald Trump’s tariffs, federal layoffs and cuts to grants weigh on their outlook, according to a new survey.
The survey was conducted by McKinley Research Group and released Wednesday at a crowded business luncheon held by the Anchorage Economic Development Corp.
The results show:
• Two-thirds of businesses believe the Anchorage economy will worsen this year, a reversal from the previous year when more businesses than not expected the economy to improve.
• Two-thirds of Anchorage businesses don’t expect to grow their workforce this year, and about one in five businesses anticipate laying off workers.
• Only one in two businesses expect sales or operating budgets to increase, a big drop from the previous year.
• One in three businesses expect to grow their capital expenses, a large drop from last year when most businesses expected to do so.
Federal policies such as tariffs are adding uncertainty to the economy, said representatives of McKinley Research Group, which has conducted the survey for 17 years. A total of 172 businesses participated this year, from April 3 to May 13.
Business confidence is only slightly pessimistic, according to their presentation.
But it has been this low only twice in the last decade, including most recently in 2021 during the height of the COVID-19 pandemic, the survey found.
Businesses also expressed key concerns that include the state budget and the Alaska economy, which are both heavily dependent on federal funding, as well as labor availability and labor costs, according to the survey.
The findings echo another survey conducted earlier this year by the Alaska Small Business Development Center. That survey of nearly 300 businesses found plunging confidence statewide as tariffs caused growing concern about rising inflation.
Moira Gallagher of McKinley Research Group presented findings during the AEDC’s Anchorage Economic Summit luncheon at the Dena’ina Center in Anchorage Wednesday, Aug. 6, 2025. (Bill Roth / ADN)
This new survey was conducted two months before passage of the One Big Beautiful Bill Act, which was championed by Trump. The law provides new tax breaks that could benefit small business, including related to research and development costs.
Despite the concerns, consumer confidence is higher than it was last year while the transportation sector is a bright spot, adding 1,000 jobs this year — in part driven by the new Amazon distribution center in Anchorage, according to McKinley Research Group’s presentation.
Effect of Trump tariffs
In part to address trade imbalances, Trump has pushed U.S. tariffs on foreign products above 17% on average, the highest since the 1930s, according to a policy research center at Yale.
More tariffs are set to go into effect Thursday, after Trump issued an executive order late last month setting new reciprocal rates from 10% to 41% for many countries.
The tariffs at this point have not reduced cargo volumes at the Ted Stevens Anchorage International Airport, where increased cargo landings and new carriers are driving up volume, according to Moira Gallagher, senior consultant with McKinley Research.
Also, cargo volume at the Don Young Port of Alaska is at record highs, Gallagher said.
The Don Young Port of Alaska, photographed on Wednesday, May 29, 2024 in Anchorage. (Loren Holmes / ADN)
But the tariffs have affected volatility in air cargo as businesses ordered ahead before tariffs went into effect, she said.
As more tariffs continue to go into effect, a reduction in demand is expected, Gallagher said.
“Companies here are preemptively responding to that anticipated reduction in demand by buying less inventory so they don’t end up with more than they can sell during the critical holiday season,” she said.
Higher costs for construction materials are also a major concern with the tariffs pushing up core inflation. So far, builders have tried to stock up on items before tariffs took a bite, to keep their costs stable, according to the presentation slides.
Federal cuts to grants
The number of jobs has leveled out in Anchorage at about 152,000, after a strong jump that saw last year’s employment reach near-record levels, according to the McKinley Research Group’s presentation.
Federal spending has helped drive some of the growth.
The $1.2 trillion bipartisan infrastructure law passed in 2021 has awarded $8.5 billion to Alaska entities over the last three years, said Katie Berry, president of McKinley Research, who also spoke at the luncheon.
The Trump administration has been reviewing and sometimes canceling grants associated with the law, such as for renewable energy projects that aren’t in alignment with the administration’s goals.
[Alaska nonprofit sues Trump administration over canceled grant]
McKinley Research has been working to track the grants, which were issued to an array of entities under the law, Berry said. An estimated 10% of the funding awarded to Alaska from the infrastructure law is paused, in review or canceled, she said.
Katie Berry, pictured, and Moira Gallagher of McKinley Research Group presented findings during the AEDC’s Anchorage Economic Summit at the Dena’ina Center in Anchorage Wednesday, Aug. 6, 2025. (Bill Roth / ADN)
Concerns about the state’s ability to provide matching grants to access federal transportation dollars is also creating uncertainty for businesses, Berry said.
“That match is very important for the industry, because it’s the mechanism by which the state can bring those new federal dollars into our economy,” Berry said.
Construction hiring levels out
The federal spending in previous years, along with oil and gas projects such as the large Pikka and Willow oil fields, has helped buoy construction efforts statewide, Berry said.
Construction hiring has leveled out after strong growth last year, according to the McKinley Research Group.
In Anchorage, multifamily residential permits are significantly higher than last year, thanks to a new tax abatement and pause on some design requirements, Gallagher said.
The increase in multifamily projects is providing some lift to overall permitting valuations that are among the strongest in the last seven years, according to the slides. They’re at about $285 million in value through June, slightly below last year.
But the supply of single-family housing continues to fall short. The average price for a single-family home is up 40% in the last five years to above $520,000, Gallagher said. Sales of single-family homes are also down sharply during that period.
Also, permit applications for commercial construction have dropped sharply, to 284 from 366, the slides show.
Visitor numbers down at Anchorage airport
As for tourism, uncertainty about the national economy and low consumer confidence may be reducing travel to Alaska from the Lower 48, Gallagher said.
Aircraft passenger volume in Anchorage is down 7% for January through June of this year, she said.
“This is going to have a significant impact on the spending that happens here in Anchorage locally, and an impact on that leisure and hospitality industry,” Gallagher said.
Employment in leisure and hospitality is down this year by about 700 jobs through June, or 4%, which could also indicate a reduction in tourism and local spending, Gallagher said.
The number of cruise ship passengers arriving in Southcentral Alaska is slightly lower than last year, with about 458,000 passengers expected this year, according to the slides.
A cruise ship with Norwegian Cruise Line docks in Seward on Monday, July 4, 2022. (Emily Mesner / ADN)
But the numbers are expected to surge in 2026, with more cruise ships planned to arrive in Whittier and Seward, Gallagher said.
Federal Medicaid cuts
Job growth in health care, an important sector, has continued this year, Berry said.
But that’s expected to stall in the second half of the year, in part because of questions that could arise from cuts to Medicaid, Berry said.
About $9.5 billion is spent annually on health care in Alaska, with about one-third of that coming from Medicaid and Medicare spending, Berry said.
Federal spending cuts that affect Medicaid in Alaska could force affected health care providers to become more selective about services they provide, Berry said.
[State retracts projected $500M impact of Trump budget bill on Medicaid program, citing carve-outs]
Less beneficiaries for Medicaid could also lead to higher costs and health care premiums, which have already increased by 25% over the last decade, she said.
“To the extent that the enrollment of Alaska beneficiaries goes down, you can see that this could have a pretty big impact on the industry, especially those segments of the industry that are more exposed to federal funding,” Berry said.