What Small Businesses Tell Us About The Economy That Wall Street Can't

(MENAFN- 3BL) Originally published by GoDaddy’s Small Business Research Lab

** New research from GoDaddy and UCLA Anderson Forecast finds that small business data can offer earlier, and in some cases stronger, signals of U.S. economic performance than traditional measures such as the stock market.**
** Full report here****.**

In the fourth quarter of 2025, GoDaddy’s Participation Index rose year-over-year, capturing renewed growth in digital small business activity nationally. Historically, increases in the index have been associated with stronger payroll employment growth and declines in unemployment within three to four quarters.

We’ve always known small businesses are the backbone of the economy. What’s new is evidence that small business formation, especially the rise of digital entrepreneurship, may also help anticipate where parts of the economy are headed.

The report,“What Small Businesses Tell Us About The Economy That Wall Street Can’t,” analyzes national data from 1990–2025 and incorporates real-time digital entrepreneurship data from GoDaddy. It finds that while stock market returns are statistically linked to economic outcomes, those relationships are relatively modest. By comparison, small business formation shows a stronger relationship with GDP growth, payroll employment, and unemployment - and often appears earlier in the data.

A one percent increase in small business births is associated with roughly:

** 0.18 percent higher GDP growth**

** 0.16 percent higher payroll employment growth**

** A 0.15 percentage point decline in unemployment**

Importantly, increases in new business formation are associated with higher payroll employment roughly three quarters later and lower unemployment about four quarters later.

At the local level, GoDaddy’s entrepreneur data shows a strong correlation (0.84) with establishments employing fewer than five people. ** Often, the first moment an idea feels real is when someone gets online, secures a domain, and builds a website. That gives GoDaddy a unique lens into early-stage economic activity**, and by sharing this data quarterly, we’re helping make that visibility accessible in a sometimes opaque or confusing economic environment.

The findings do not imply causation or serve as standalone forecasts. Rather, they show that stock market performance alone provides an incomplete picture of economic conditions, particularly when it comes to jobs and local opportunity.

This research reinforces why looking at, talking about, and supporting small businesses is not just nice - it’s economically smart and essential. Small businesses deserve to be central in economic conversations, not peripheral to them.

Introducing Small Street alongside Wall Street and Main Street offers a more complete lens for understanding how economic momentum is taking shape across communities.

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