New research from GoDaddy and UCLA Anderson Forecast reveals that digital small business activity provides earlier and stronger signals of U.S. economic performance than traditional indicators like the stock market. By introducing "Small Street" as a complementary lens, the study highlights how entrepreneurial data—especially from online ventures—captures real-time shifts in local economies and job creation.
Quick Intel
What Small Street Reveals About the Economy
The report, titled "What Small Businesses Tell Us About the Economy That Wall Street Can't," positions Small Street as an essential addition to Wall Street and Main Street indicators. Traditional metrics often lag or focus narrowly on national trends, while Small Street draws on millions of digital small and micro-businesses to deliver timely, localized signals.
Key metrics include the number of digital entrepreneurs, new online ventures, and GoDaddy's proprietary Participation Index. These capture entrepreneurial momentum within months, offering a forward-looking view of economic health.
Stronger Links to Real Economic Outcomes
Analysis spanning decades demonstrates that small business indicators—particularly new business creation—exhibit two to five times stronger statistical relationships with core economic measures than stock market returns. While equities show modest ties to GDP, employment, and unemployment, small business activity aligns more closely with actual growth and job trends.
The research underscores that digital-first entrepreneurship mirrors patterns seen in traditional brick-and-mortar small businesses, serving as a reliable early proxy for broader economic direction.
Earlier Signals from Entrepreneurial Activity
Changes in small business formation appear ahead of official labor statistics. Increases in new ventures are associated with higher payroll employment roughly three quarters later and reduced unemployment about four quarters later. This lead time allows Small Street data to detect local economic shifts before they fully register in government reports.
GoDaddy's granular, zip-code-level insights further validate the approach, showing high alignment with micro-establishments and meaningful connections to employment data.
"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."
This collaborative study reinforces the critical role of small businesses as drivers of innovation, growth, and employment, providing policymakers, analysts, and the public with a more complete, timely picture of economic conditions.
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.
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