What Small Businesses Tell Us About the Economy That Wall Street Can't
MWN-AI** Summary
New research conducted by GoDaddy and UCLA Anderson Forecast reveals that insights from small businesses, particularly in the digital sector, offer a vital early assessment of the U.S. economy that traditional markers like the stock market often miss. The report, titled "What Small Businesses Tell Us About the Economy That Wall Street Can't," introduces the "Small Street" perspective, emphasizing the importance of digital entrepreneurship as a barometer for national economic health.
In the fourth quarter of 2025, indicators from GoDaddy’s Participation Index highlighted a year-over-year increase in digital small business activity, signaling potential job growth ahead. This aligns with historical data, where surges in small business establishments typically precede improvements in payroll employment and declines in unemployment. Findings illustrate that small business dynamics are more closely correlated with economic indicators such as GDP increases and employment changes than stock performance.
Furthermore, the research indicates that shifts in entrepreneurial activity can be detected earlier than alterations in traditional labor market data, suggesting that small businesses serve as a more immediate reflection of local economic conditions. The correlation between new business formations and subsequent labor trends underlines the significance of small businesses in economic forecasting.
Experts argue that while Wall Street remains a crucial indicator, it does not provide a complete picture of economic vitality, especially regarding employment and opportunities. By integrating the Small Street lens with established economic measures, policymakers and analysts can gain more nuanced insights into the economy's real-time performance. Ultimately, this analysis underscores the vital role of small businesses in shaping economic understanding and the necessity for adaptive economic frameworks to capture evolving market conditions.
MWN-AI** Analysis
Small businesses have increasingly become a vital indicator of economic health, offering insights that traditional financial metrics like those from Wall Street may overlook. Recent research by GoDaddy and the UCLA Anderson Forecast highlights the role of digital entrepreneurship in capturing early shifts in economic conditions, aligning more closely with employment growth and declines in unemployment than stock market performance.
The GoDaddy Participation Index has shown that increases in small business activity typically precede improvements in payroll employment by about three quarters. This relationship suggests that monitoring entrepreneurial activity can provide a more timely gauge of economic health. In fact, the data indicates that even a 1% rise in small business births correlates with a 0.18% increase in GDP and a 0.16% rise in payroll employment, underscoring the significant impact of small businesses on the economy.
As we move into 2026, investors should pay close attention to the trends indicated by small businesses, particularly those operating online. This sector's rapid growth can signal potential job creation and positive economic changes, offering insights into local and national economic performance before these shifts appear in broader economic indicators.
In light of these findings, investors and policymakers should integrate small business metrics into their economic analysis frameworks. The emergence of digital-first entrepreneurship highlights an evolving economic landscape, while fostering innovation and job opportunities in communities. As Wall Street often reflects historical performance and provides a lagging view, the real-time data from small businesses—what is now termed "Small Street"—should inform a more comprehensive understanding of economic trends moving forward. Therefore, keeping an eye on small business data could enhance decision-making in investments and policy formulation.
**MWN-AI Summary and Analysis is based on asking OpenAI to summarize and analyze this news release.
PR Newswire
New GoDaddy Small Street data shows digital business growth accelerating in late 2025, signalling stronger job gains ahead
TEMPE, Ariz., March 3, 2026 /PRNewswire/ -- New research from GoDaddy and UCLA Anderson Forecast finds that small business data offers earlier and stronger indication of upcoming U.S. economic performance than traditional measures such as the stock market. Last quarter's data captures digital business activity rising year-over-year.
By bringing digital small businesses into the picture for the first time, the research shows how entrepreneurship can act as an early barometer of national economic health, complementing rather than replacing established measures. The findings come at a time when financial markets, jobs data, and on the ground, perceptions often tell different stories.
What Small Street Is Showing Today
In the fourth quarter of 2025, GoDaddy's Participation Index rose compared to Q4 2024, signalling renewed growth in digital small business activity nationally. Historically, increases in the index have preceded stronger payroll employment growth and declines in unemployment within three to four quarters. The latest reading points to economic conditions consistent with improving job growth in the months ahead.
The report, "What Small Businesses Tell Us About the Economy That Wall Street Can't" introduces "Small Street" as a complementary economic lens built for this moment, giving small business data a seat alongside traditional market and macroeconomic indicators. While establishment-based data often arrives with a lag or reflects only national trends, Small Street adds a more real-time layer of insight by tracking entrepreneurial activity across millions of digital small and micro-businesses. Drawing on signals such as the number of digital entrepreneurs, new digital ventures, and GoDaddy's proprietary Participation Index, the lens captures shifts within a few months at a highly granular, local level.
Key findings include:
- Small business indicators have a stronger relationship to economic conditions such as GDP growth, payroll employment growth and declines in unemployment than stock market returns.
- Indicators tied to entrepreneurial activity reflect changes in economic conditions earlier than traditional labor market data.
- Digital small business creation identifies new business formation earlier than government datasets.
Looking across decades of national data, the analysis reconfirms that stock market returns are statistically linked to economic outcomes, but the relationships are relatively modest. By comparison, small business indicators, specifically the creation of new businesses frequently with a physical location, show two to five times stronger relationships with real economic conditions.
A 1% increase in small business births is associated with roughly 0.18% higher growth in GDP, 0.16% higher payroll employment growth, and a 0.15 percentage point decline in unemployment.
The research also finds that changes in small business activity tend to appear earlier than traditional labor market data. Increases in new business formation are associated with higher payroll employment roughly three quarters later and lower unemployment about four quarters (a whole year) later, suggesting entrepreneurial activity captures shifts in local economic conditions before they are fully reflected in official statistics.
GoDaddy's Small Street data highlights a particularly strong alignment with local business formation. At the zip code level, the number of GoDaddy entrepreneurs has a high correlation (0.84) with establishments employing fewer than five people. And a moderate correlation (0.53) with payroll employment stats. The findings suggest Small Street data identifies early business formation before it appears in many government datasets, and capture that it is a reliable proxy for the same trends as seen with traditional brick and mortar small businesses.
"As traditional economic indicators are often delayed or limited in scope, this research shows why small business activity, particularly digital-first entrepreneurship, deserves greater attention in economic analysis," said Alexandra Rosen, economist and head of GoDaddy's Small Business Research Lab.
"Wall Street remains an important indicator, but near real-time insight into online small business activity offers an additional lens for understanding what is happening in the broader economy, based on activity on Small Street and Main Street."
William Yu, an economist at UCLA Anderson Forecast, said the research highlights the limits of relying on any single indicator to understand economic health.
"Different indicators capture different parts of the economy. What this analysis shows is that early-stage small business activity captures dimensions of local economic change that equity markets alone cannot."
Leading economists agree the analysis provides needed insight on where growth, innovation and job creation are headed.
"This report is an important contribution to how we understand the real economy because it shines a spotlight on where Main Street employers and their employees live and work," said U.S. Chamber of Commerce Chief Economist Curtis Dubay. "By pairing decades of macroeconomic data with GoDaddy's real-time view of digital entrepreneurs, these data show what our local chamber of commerce partners see every day: small businesses are the most direct, timely signal of economic health in communities across America."
The researchers emphasize that the findings do not imply causation and are not intended to predict future economic outcomes. Instead, the analysis shows that stock market performance by itself provides an incomplete picture of how economic conditions are experienced, particularly around jobs and opportunity.
The introduction of Small Street alongside Wall Street and Main Street offers journalists, policymakers, and the public a reusable lens for understanding economic conditions today and spotting early shifts as they unfold across communities.
The full report is available at research.godaddy/wallstreet
About GoDaddy
GoDaddy, the world's largest domain name registrar, helps millions of entrepreneurs globally start, grow, and scale their businesses. People come to GoDaddy to name their idea, build a website and logo, sell their products and services and accept payments. GoDaddy Airo®, the company's AI-powered experience, makes growing a small business faster and easier by helping them to get their idea online in minutes, drive traffic and boost sales. GoDaddy's expert guides are available 24/7 to provide assistance. To learn more about the company, visit www.GoDaddy.com.
About GoDaddy Small Business Research Lab
The GoDaddy Small Business Research Lab (formerly known as Venture Forward) analyzes more than 20 million online businesses with a digital presence, defined by a unique domain and active website. Most of these businesses employ fewer than ten people, classifying them as microbusinesses. Since 2018, the program has surveyed more than 50,000 entrepreneurs, making it a leading source of data and insights on microbusiness trends. To learn more, visit www.godaddy.com/research
Source: GoDaddy Inc.
SOURCE GoDaddy
FAQ**
How does the growth of digital businesses, as indicated by GoDaddy Inc. Class A GDDY's Participation Index, correlate with traditional economic indicators such as GDP and employment rates?
In what ways does GoDaddy Inc. Class A GDDY's analysis suggest that small business indicators provide earlier signals of economic conditions compared to Wall Street metrics?
How can policymakers leverage the insights from GoDaddy Inc. Class A GDDY’s Small Street data to address job creation and economic growth in local communities?
What are the implications of GoDaddy Inc. Class A GDDY’s findings for traditional investors when assessing the overall health of the economy beyond stock market performance?
**MWN-AI FAQ is based on asking OpenAI questions about GoDaddy Inc. Class A (NYSE: GDDY).
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