GoDaddy and UCLA Anderson Report That Activity Index for Microbusinesses in the U.S. Increased in Fourth Quarter 2021
LOS ANGELES, March 29, 2022 /PRNewswire/ -- In the GoDaddy/UCLA Anderson Forecast Microbusiness Activity Index Series update for fourth quarter 2021, UCLA Anderson Forecast economists Leila Bengali and William Yu report that the Microbusiness Activity Index for the U.S. increased from 100.3 in September to 102.1 in December. This increase shows how small business activity growth accelerated in the fourth quarter of 2021.
"Two possible reasons could explain this increase in the composite online microbusiness index," Bengali and Yu write in the report. "First, overall U.S. economic growth accelerated in the fourth quarter of 2021. Second, there may be seasonality in online activity. As the index is only in its second release, there is not enough data as yet to evaluate the magnitude, if any, in the seasonality."
"In our first report — 'What Drives Microbusiness Formation and Growth?' — which we released last July, we documented evidence of correlations between the macroeconomy and microbusinesses. For example, each additional one-unit gain in the index is associated with a 0.1 percentage point decline of the unemployment rate," Yu says.
In July 2021, Bengali and Yu created the pioneering indexes to track the activity of online microbusinesses at the national, state, CBSA and county levels, which demonstrated for the first time the activity of an important, but often overlooked, driver of the economy. The indexes were developed based on data provided by GoDaddy's Venture Forward, a multiyear research initiative to quantify the impact of 20 million online microbusinesses on local economies and to provide a unique view into the demographics and needs of entrepreneurs.
"The Microbusiness Activity Index Series can help policymakers benchmark performance," said Jeremy Hartman, vice president of Venture Forward at GoDaddy. "They can use it to support and invest in their local microbusinesses and in return drive their economies."
The Microbusiness Activity Index, as a composite index, has three even-weighted sub-indexes. The first is infrastructure, which includes human capital and digital infrastructure, such as broadband and computer access, assessing how ready a community is for microbusinesses to take root. These are long-term factors that do not change from one quarter to the next. Next is participation, which includes the density and growth rates of online microbusinesses and online microbusiness owners. The participation index increased from 100.36 in September to 100.44 in December. The third and final component is engagement, which captures activity levels through a variety of measures of online and website engagement. The engagement index increased markedly from 99.86 in September to 105.85 in December, which indicates more engaged online microbusiness activity even though their formation and growth, represented by the participation index, are rather mild.
About GoDaddy
GoDaddy is empowering everyday entrepreneurs around the world by providing all of the help and tools to succeed online. GoDaddy is the place people come to name their idea, build a professional website, attract customers, sell their products and services, and manage their work. Our mission is to give our customers the tools, insights and the people to transform their ideas and personal initiative into success. To learn more about the company, visit www.GoDaddy.com.
About UCLA Anderson Forecast
UCLA Anderson Forecast is one of the most widely watched and often-cited economic outlooks for California and the nation and was unique in predicting both the seriousness of the early-1990s downturn in California and the strength of the state's rebound since 1993. The Forecast was credited as the first major U.S. economic forecasting group to call the recession of 2001 and, in March 2020, it was the first to declare that the recession caused by the COVID-19 pandemic had already begun.
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About UCLA Anderson School of Management
UCLA Anderson School of Management is among the leading business schools in the world, with faculty members globally renowned for their teaching excellence and research in advancing management thinking. Located in Los Angeles, gateway to the growing economies of Latin America and Asia and a city that personifies innovation in a diverse range of endeavors, UCLA Anderson's MBA, Fully Employed MBA, Executive MBA, UCLA-NUS Executive MBA, Master of Financial Engineering, Master of Science in Business Analytics, doctoral and executive education programs embody the school's Think in the Next ethos. Annually, some 1,800 students are trained to be global leaders seeking the business models and community solutions of tomorrow.
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