Small Business Data Signals Economic Strength
What happened
New research from GoDaddy and UCLA Anderson Forecast finds that digital small business growth accelerated in late 2025, offering an early indicator of stronger job gains ahead. The data suggests that Main Street activity can be a more predictive economic signal than traditional Wall Street metrics.
Why it matters
The research, dubbed "Small Street," posits that the millions of digital microbusinesses operating online are a more agile predictor of economic shifts than traditional, slower-moving government data. This analysis relies on GoDaddy's proprietary Microbusiness Activity Index (MAI), developed with the UCLA Anderson Forecast, which tracks the health of these small ventures. A key component of the index, the "Participation Index," which measures the number of digital entrepreneurs and their ventures, saw a year-over-year increase in the fourth quarter of 2025. Historically, a rise in this index has foreshadowed stronger payroll employment growth and a decrease in unemployment by a lead time of three to four quarters. The report quantifies this predictive power, indicating that a 1% increase in new online business formation is associated with a roughly 0.16% increase in payroll growth in subsequent quarters. This correlation provides a concrete link between the activity of individual entrepreneurs and national economic trends. Another metric, the "Engagement sub-index," which measures the online maturity of these businesses, saw its sharpest increase on record, jumping from 106.6 to 124.9. This surge is largely attributed to the widespread adoption of generative AI tools that enhance productivity and customer interaction for online entrepreneurs. The job creation potential of these microbusinesses is significant, with the latest data showing that each new entrepreneur generates, on average, about eight additional jobs in their local economy. This impact stems from direct hiring and increased local demand. The ongoing project is part of GoDaddy's Venture Forward initiative, a multi-year research effort to quantify the economic impact of businesses with fewer than ten employees and an active website. This data is made publicly available to inform policymakers and academic researchers.
Key numbers
- New research from GoDaddy and UCLA Anderson Forecast finds that digital small business growth accelerated in late 2025, offering an early indicator of stronger job gains ahead.
- A key component of the index, the "Participation Index," which measures the number of digital entrepreneurs and their ventures, saw a year-over-year increase in the fourth quarter of 2025.
- The report quantifies this predictive power, indicating that a 1% increase in new online business formation is associated with a roughly 0.16% increase in payroll growth in subsequent quarters.
- Another metric, the "Engagement sub-index," which measures the online maturity of these businesses, saw its sharpest increase on record, jumping from 106.6 to 124.9.
Quick answers
What happened in Small Business Data Signals Economic Strength?
New research from GoDaddy and UCLA Anderson Forecast finds that digital small business growth accelerated in late 2025, offering an early indicator of stronger job gains ahead. The data suggests that Main Street activity can be a more predictive economic signal than traditional Wall Street metrics.
Why does Small Business Data Signals Economic Strength matter?
The research, dubbed "Small Street," posits that the millions of digital microbusinesses operating online are a more agile predictor of economic shifts than traditional, slower-moving government data. This analysis relies on GoDaddy's proprietary Microbusiness Activity Index (MAI), developed with the UCLA Anderson Forecast, which tracks the health of these small ventures. A key component of the index, the "Participation Index," which measures the number of digital entrepreneurs and their ventures, saw a year-over-year increase in the fourth quarter of 2025. Historically, a rise in this index has foreshadowed stronger payroll employment growth and a decrease in unemployment by a lead time of three to four quarters. The report quantifies this predictive power, indicating that a 1% increase in new online business formation is associated with a roughly 0.16% increase in payroll growth in subsequent quarters. This correlation provides a concrete link between the activity of individual entrepreneurs and national economic trends. Another metric, the "Engagement sub-index," which measures the online maturity of these businesses, saw its sharpest increase on record, jumping from 106.6 to 124.9. This surge is largely attributed to the widespread adoption of generative AI tools that enhance productivity and customer interaction for online entrepreneurs. The job creation potential of these microbusinesses is significant, with the latest data showing that each new entrepreneur generates, on average, about eight additional jobs in their local economy. This impact stems from direct hiring and increased local demand. The ongoing project is part of GoDaddy's Venture Forward initiative, a multi-year research effort to quantify the economic impact of businesses with fewer than ten employees and an active website. This data is made publicly available to inform policymakers and academic researchers.
