Each of us are trying to figure out the economy and what is occurring as we are faced with the reality of the increased cost of living. Although, it appears that Alaska is not affected as much as some our our lower forty eight neighbors, with some exceptions. Gasoline prices in Alaska continue to exceed the national average, yet the product is produced in our state. No doubt, you have noticed a "sharp" increase in your utility costs, especially in the electrical utilities.

Today, the numbers came out for retail sales during for the past year. Retail sales were down 0.1 percent which does not appear to be that drastic. However, it is a sharp upward increase after a 4.1 per cent gain in 2007. According to the Department of Commerce, business sales fell by a record of 5.1% in November 2008.

However, being an optimist, I think when our economists develop these figures, they should also be taking into consideration other factors, primarily E-Commerce. I have always been a proponent that in our electronic era, our communities and especially the "small business" community will be adversely affected by E-Commerce.

While retail sales continue to decline nationwide, we have seen an increase in retail sales via E-Commerce. The Department of Commerce reports that E-Commerce retail sales in in the 3rd Quarter 2008 was 34.4 billion dollars. This amount indicates an increase of 1.3% in comparison to the 2nd Quarter of 2008. Reviewing this trend over the span of the past year, 3rd Quarter 2007 to 3rd Quarter 2008 there was an increase of 5.7% in E-Commerce retail sales.

The chart below indicates the continuously rise of E-Commerce retail sales from the 3rd Quarter of 2000 to the 3rd Quarter of 2008.

Although, the Internet is a great way to shop and you can save a few dollars online you should also consider the impact that it is having on your local community. The cost of doing business via the Internet is much less than maintaining a "store front" business. The property tax and retail sales tax burden is eliminated for E-Commerce sales. Consequently, when this occurs, a tax deficit occurs for the community and state. To make up this deficit and maintain services to the community, your personal property and sales tax increases. The local economy also suffers from E-Commerce, the small business owner in your community is forced to either increase prices and put themselves above the average recommended retail price or decrease their cost of doing business by a forced lay off of employees. Each of us have contributed to a variety of charitable organizations. The small business person is contacted daily for contributions for these worthwhile projects. Unfortunately, as the cost of doing business increases, these charitable contributions decrease proportionately.

With the continued increase in the popularity of E-Commerce and the expansion of super stores being developed in our communities, with time the small businesses will disappear from the scene very similar to what we have seen in our "family farms" and independent commercial fisheries. That will be a shame as our country, state, and community was built on the spirit of the entrepreneur. These small business owners are our neighbors, friends, and family and deserve our support.