Level of Microbusiness Activity Remains the Same As in Fourth Quarter 2021
LOS ANGELES, June 22, 2022 /PRNewswire/ — In the first quarter 2022 update of the GoDaddy/UCLA Anderson Forecast Microbusiness Activity Index (MAI), UCLA Anderson Forecast economist William Yu reports that overall MAI activity remains at a similar level as indicated in the fourth quarter of 2021. The Q2 report will be available in August and will likely show interesting new trends with the economy shifting.
In July 2021, the UCLA Anderson Forecast, in partnership with GoDaddy Inc., published the first MAI, a data-driven analysis regarding the formation, growth and dynamics of online microbusinesses using data provided by GoDaddy. The analysis found evidence that microbusiness formation and growth may boost local economic activity. For example, each additional 1-unit increase in the MAI leads to a 0.1 percentage point decline in the unemployment rate.
Each quarter, the Forecast publishes an updated report and index. The current report represents the 2022 Q1 update and contains data through March 2022 for the nation, individual states, metros and counties across the U.S.
The MAI is associated with economic outcomes. Previous reports documented evidence of correlations between the macroeconomy and microbusiness. A recent internal customer survey conducted by GoDaddy documents direct evidence of these correlations. For instance, 21% of microbusiness owners said that they were not employed when they started the microbusiness. That means microbusiness formation and growth lowered unemployment rates. Also, 28% said that they hired 2 to 4 employees, contributing to payroll and employment growth, and 66% provided main or supplemental income up to several thousand dollars per month, generating additional income in the economy.
The MAI is composed of three sub-indices:
Infrastructure encompasses human capital and digital infrastructure, including broadband and computer access. These are long-term factors that do not change much from one quarter to the next. The annual American Community Survey benchmarks the infrastructure index. The latest revision was from 100 in 2020 to 102.7 in 2021, reflecting improvements in education attainments and access to broadband/computer.
Participation includes the density and growth rate of online microbusinesses and online microbusiness owners. The participation index slightly increased from 100.4 in December 2021, to 100.7 in January and February 2022, and returned to 100.5 in March. The higher level of participation in the beginning of the year might reflect seasonality at the start of the calendar year, but as yet there is not enough experience with the index to verify it. In addition, the report finds that the participation index has the most explanatory power of local economic activities. The aforementioned decline of unemployment rates in response to increases of MAI is mostly driven by an increase of the participation index. The preliminary results also suggest that each additional 1-unit increase in the participation index leads to an increase of 1,200 people employed locally on average.
Engagement includes a variety of measures of online and website engagement. The engagement index fluctuated from 105.2 in December 2021
The highlights of the GoDaddy/UCLA Anderson Forecast Microbusiness Activity Index (MAI) update for the first quarter 2022 are:
- The overall microbusiness activity in 2022 Q1 remains at a similar level as in 2021 Q4.
- Forecast economists find that each additional 1-unit increase in the MAI leads to a 0.1 percentage point decline in the unemployment rate among counties in the U.S.
- The participation index has the most power to explain local economic activities
Read the full GoDaddy/UCLA Anderson Forecast Microbusiness Activity Index (MAI) update for the first quarter 2022.
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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.
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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