While small businesses across the U.S. experience an overall slowdown, five metro areas are bucking the trend.
That's according to the Yelp Economic Average, a benchmark measuring the activity of millions of small businesses with a presence on the review website. Yelp's analysis identified five "boomtowns," each one home to an especially strong combination of consumer demand and business growth during the second quarter of 2019: Honolulu; Louisville; Memphis, Tennessee; Milwaukee; and Portland, Maine. Growth in these cities tended to benefit agents, lawyers, and services related to the real estate industry, driven by growth in development combined with leniency in local laws.
At the same time, the Yelp Economic Average for businesses throughout the U.S. dropped by 0.2 percent during the second quarter, to 99.2. The benchmark has been performing below its baseline level of 100 for the past three quarters, and now stands at 2 percent below its peak. The benchmark shows a "cooling brick-and-mortar economy across the U.S. that's signaling a potential slowdown in consumer demand and business growth," Carl Bialik, Yelp's data science editor, said in a statement. Bialik added that local Main Street economies "may be showing warning signs."
Among the factors contributing to the growth of the five cities were Milwaukee's new NBA arena, Memphis's downtown housing demand, and Portland, Maine's increase in residents from other states. Cities such as Portland, Oregon; San Francisco; and San Jose, California, that have already seen tremendous growth in demand in recent decades are now lacking in development, according to Yelp, partly because of ongoing debates over how much housing to build and where.
Yelp's benchmark aims to measure a broad swath of the economy that it says is missed by other indicators. It reaches back to the fourth quarter of 2016, using that quarter's economic state as the baseline at 100.