Beyond Wall Street: Is 'Small Street' the New Economic Crystal Ball?

TEMPE, Ariz. – March 03, 2026 – While financial analysts watch the tickers on Wall Street for clues about the nation's economic future, a new report suggests the most powerful prophecies may be coming from a different address: 'Small Street.'

New research from web hosting giant GoDaddy and the prestigious UCLA Anderson Forecast argues that the collective activity of millions of digital small businesses provides an earlier and more accurate signal of future economic health, particularly job growth, than traditional stock market indicators. The report, titled "What Small Businesses Tell Us About the Economy That Wall Street Can't," introduces this new lens at a time when mixed signals from financial markets and official government data often paint a confusing picture.

According to the study, a late 2025 surge in the formation and activity of online ventures points toward stronger job growth in the months ahead, challenging a more subdued narrative presented by some recent government statistics. This places the digital entrepreneur at the center of economic forecasting, suggesting their hustle is a barometer for the country's financial climate.

The 'Small Street' Thesis

The core of the research is a set of indicators that track the pulse of digital entrepreneurship. The proprietary GoDaddy Participation Index, which measures the level of digital small business activity, rose in the fourth quarter of 2025 compared to the previous year. Historically, the report claims, increases in this index have preceded stronger payroll employment growth and declines in the unemployment rate by three to four quarters.

"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, in the press release. "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."

The analysis, which looks at decades of national data, finds that indicators tied to the creation of new small businesses have a relationship with real economic conditions—like GDP growth and employment—that is two to five times stronger than that of stock market returns. Specifically, a 1% increase in small business births is associated with approximately 0.18% higher GDP growth, 0.16% higher payroll employment growth, and a 0.15 percentage point drop in unemployment about a year later.

This idea of a more grounded indicator is echoed by economists. "Different indicators capture different parts of the economy," noted William Yu, an economist at UCLA Anderson Forecast who collaborated on the research. "What this analysis shows is that early-stage small business activity captures dimensions of local economic change that equity markets alone cannot."

Support for this view also comes from broader business advocacy groups. "This report is an important contribution... 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. He added that the data confirms what local chambers see daily: "small businesses are the most direct, timely signal of economic health in communities across America."

A Tale of Two Economies?

Despite the optimistic forecast from 'Small Street,' its predictions are emerging against a backdrop of more cautious official data. The 'Small Street' report's finding of accelerating digital business activity in Q4 2025 appears to diverge from the U.S. Bureau of Economic Analysis (BEA) report for the same period. The BEA noted that real GDP growth decelerated significantly to a 1.4% annual rate in Q4 2025, a sharp drop from the 4.4% increase in the third quarter.

Furthermore, the labor market, which 'Small Street' data purports to predict, has shown signs of cooling. One Federal Reserve Governor recently characterized 2025 as "one of the weakest years in decades outside of a recession" for job creation, with revised figures showing startlingly low net gains for the year. The unemployment rate, while historically low at 4.3%, has shown signs of stabilizing rather than continuing its downward trend.

This disconnect raises a critical question: Is 'Small Street' seeing a nascent recovery that lagging official indicators have yet to capture, or is its focus on digital-first entrepreneurs providing a skewed, overly optimistic view? The report's advocates argue for the former, suggesting that entrepreneurial activity is the first tremor of an economic shift that takes months to register in broader government surveys. The three-to-four-quarter lag time is key; the optimism from Q4 2025 would not be expected to manifest as strong payroll numbers until late 2026 or early 2027.

Under the Hood: Data, Drivers, and Strategy

Understanding the 'Small Street' indicator requires a look at its composition. The data is derived from GoDaddy's own ecosystem of over 20 million online businesses, primarily microbusinesses with fewer than ten employees who have an active domain and website. The health of these ventures is tracked by the Microbusiness Activity Index (MAI), which considers infrastructure, the number of participants, and their level of digital engagement.

Interestingly, the report notes that a significant driver of increased engagement in 2025 was the widespread adoption of generative AI tools. This includes GoDaddy's own Airo platform, which helps entrepreneurs build websites and marketing materials. The link suggests that the same technological wave boosting productivity for these small ventures is also boosting the very metrics that signal economic health.

This positions the research as both a potentially valuable economic tool and a masterful piece of corporate strategy. By commissioning and publicizing this data with a credible academic partner, the company elevates the importance of its core customer base—the digital entrepreneur—in the national economic conversation. It frames GoDaddy not just as a service provider, but as a key player with unique insight into the real economy, subtly tying the health of 'Small Street' to the adoption of the digital tools it sells.

From Data to Policy

Regardless of the strategic motivations, the introduction of a new, highly granular data source has significant potential policy implications. The 'Small Street' data, which can be analyzed down to the zip code level, offers a real-time view of economic development that national statistics often miss. The research shows a high correlation (0.84) between the number of GoDaddy entrepreneurs and the number of local establishments with fewer than five employees, suggesting it is a reliable proxy for early-stage business formation.

For policymakers, this could be a game-changer. Access to leading indicators of employment trends could enable more proactive and targeted support for struggling regions before a downturn becomes entrenched. If an uptick in digital business creation in a specific area reliably predicts job growth, it could inform investments in digital literacy, broadband infrastructure, and micro-lending programs.

The researchers are careful to note that their findings show correlation, not causation, and are not intended to be a predictive tool in isolation. However, by providing a detailed, real-time view of the economy's most dynamic segment, 'Small Street' offers a powerful complement to traditional measures. It reminds us that long before the numbers appear in a government report or move the stock market, the economy is built, one venture at a time.