Business climate survey shows mixed outlook for 2025

The results of a 2025 Fairbanks area business climate survey sponsored by the Fairbanks Economic Development Corporation show mixed outcomes this year compared to 2024.

Jomo Stewart, FEDC’s president and chief executive officer, gave an in-depth preview to the Greater Fairbanks Chamber of Commerce last week.

Nearly a third (31%) of respondents indicated they see a worsening business climate this year; another 30% said it looked good, and 25% said the climate would remain flat, while 14% remained unsure. This contrasts with 55% who said 2024 was a good or very good year, while 38% said it was fair and 6% said it was poor.

“These are self-reporting positions and ideas and beliefs of our economy,” Stewart said.

Stewart said the survey ran from March 21 to April 20 and solicited 160 qualifying responses from businesses in the Fairbanks North Star Borough, including 110 for-profit companies, 26 nonprofit businesses or organizations, and 23 organizations involved in economic development. This is up significantly from last year, when only 35 businesses responded.

“We are facing some challenges as a community relative to local and state funding and spending, as well as proposed actions being telegraphed or proposed on the federal level,” Stewart said.

This prompted FEDC to ask businesses about “potential exposure if certain things come to pass.”

Stewart noted the survey results are unique in that they bridge a period before and after President Donald Trump signed several sweeping executive orders.

“This allowed us to get a read on both before and after those things materialized,” Stewart said.

Stewart said FEDC asked businesses their thoughts on how 2024 ended, as well as their outlook for 2025. He added that this year, FEDC partnered with the Fairbanks Chamber, the North Pole Community Chamber of Commerce, and the Alaska Small Business Development Center to reach as many businesses as possible.

“The purpose of this kind of enterprise is to provide valuable information to our policymakers and decision-makers so that, ideally, decisions are made on good data,” Stewart said.

The survey is broken down by sectors, including construction, energy, government, health care, hospitality, natural resources, professional services, retail, and other categories.

In 2024, most sectors reported either a fair or very good to good business climate. Health care and energy were mainly fair, while tourism, natural resources, and professional services reported a mostly good year.

Stewart said this year, the sectors are more mixed. Several sectors, including health care, tourism, construction, and natural resources, are divided on whether the climate will worsen, remain the same, or improve compared to 2024.

“We felt that health care faced the highest level of uncertainty,” Stewart said.

The energy sector, by comparison, swung to 60% of respondents saying 2025 will worsen.

Stewart added that respondents did identify bright spots for 2025, including tourism, military, and resource development, noting that a “North Slope Renaissance” will bring positive gains to the borough’s economy.

The top challenges respondents identified are the continued outmigration of working-age individuals, a lack of a skilled workforce base, a high cost of living, and uncertainties related to federal political and funding issues.

“In a [local] economy where 70 cents of every dollar originates somehow or some way in government spending, fluctuations in government spending … can have an outsized impact,” Stewart said. He added that this ranges from paychecks and contracts to spending in the local economy.

Industries in the energy, retail, construction, tourism, government, and business services sectors rely on local government spending for 60% or more of their funding.

The government sector — which includes education, military, and government services — reported receiving 60% of its funding from the state government, while construction and health care reported relying on the federal government for at least 60% of their funding.

Businesses also ranked economic priorities for the next five years. Energy costs topped the list, followed by quality K-12 education options, workforce retention and recruitment, affordable housing, and health care/social services options.

“Relative to energy costs, it’s one of those things that impacts everything across our economy,” Stewart said. “Our community has experienced some pretty high levels of uncertainty and challenges over the years.”

He added that health care and education have similar impacts on the economy.

FEDC’s business climate survey is available online at investfairbanks.com. FEDC is currently working on a 2025 Economic Analysis Report, which will provide a deep dive into the borough’s economy.