The U.S. economy was weak in the fourth quarter, and growth is projected to drop further in the first three months of 2020, according to a new economic indicator based on Yelp Inc.’s proprietary data on Thursday.
The California based business directory service and crowd-sourced review forum
YELP, -0.78%
said the results suggests fourth-quarter GDP growth will come in below the third quarter’s 2.1% annual growth rate. The Commerce Department will release its first estimate of Q4 GDP on Jan. 30.
Yelp said it designed its Yelp Economic Average (YEA) report to be a benchmark of local economic strength, based on data from millions of local businesses and tens of millions of users on the on-line listing service’s platform.
Unlike existing economic indicators, Yelp said the index will measure local, rather than national, economic strength. The firm tracks the health of consumer demand and business growth. The firm has information on millions of brick-and-mortar businesses and consumer demand. The data does not cover on-line shopping.
“The productivity of most plumbers, pastry chefs, and personal-injury lawyers isn’t reflected in stock indexes and business headlines, but collectively they make up a vital part of the work force and the fabric of local commerce,” said Carl Bialik, the firm’s data science editor, in a blog post accompanying the index.
The YEA found that most local economies nationwide slumped by 1.4% in the fourth quarter. This weakness pushed down growth in 2019 to a decline of 1.3% from the prior year.
“The slowdown in overall economic growth in 2019 reflected business profits declining, which contributed to a fall in business investments. Uncertainty around (President Trump’s) trade policy also hindered local economic growth in 2019,” said Bialik.
“Expect more of the same in the first quarter,” he added.
Yelp believes its activity index will mirror the government’s gross domestic product data.
Retail, food and auto businesses dragged down the local economy in 2019 and each one is expected to keep falling in the beginning of 2020.
“The forecast suggests a continued decline in local economic health—nationally and in many major markets and sectors…dragged down by the retail and restaurant sectors,” Bialik said.
Other interesting findings:
• The five states with the most growth in 2019 were the Dakotas, Wyoming, Hawaii, and Alaska.
• The five states with the least growth were Washington D.C., Illinois, Massachusetts, Connecticut and California.
• The top five metro areas last year were Milwaukee, Honolulu, Portland, Me., Buffalo and Pittsburgh.
• The bottom five metro areas were Portland, Or., Dallas, Chicago, San Jose and San Francisco.
• Weakness in California, Texas, Florida, New York City, Chicago and Seattle is expected to drag down the first quarter.
Source : MTV
