Yelp Saying Its Data On Local Businesses And Consumers In The US Shows Early Signs Of A Downturn

Late in 2018, business forecasters in the US issued warnings that the country’s economy might be close to hitting a downturn. Early in January, crowd-sourced review firm Yelp made issued another prediction of a downturn.

Over the last quarter of 2018, the Yelp Economic Average, the company’s index that measures the activities of small businesses, like junk hauling Orange County, present on the site, dropped by more than 2 points to 98.5, from 100.7. According to Yelp, this is the YEA’s biggest drop since the last quarter of 2018, and is attributed to the decline in professional, home and local service sectors across the US.

The YEA had 30 categories across these three sectors, and almost all of them dropped in the last quarter of 2018, which Yelp states is an early warning sign of an economic slowdown. These categories account for a large chunk of the local economy, covering businesses like office cleaning, restaurants, and junk hauling Orange County and across the country.

Yelp Data Science Editor Carl Bialik, says that a lot of the services which showed a drop in activity were services that people can be flexible when paying for them; they’re professional services that tend to be luxury expenditures. He explains that this means that consumers are tightening their belts and cutting down on nonessential expenditures.

Bialik offered some reasons as to the decline. For example, he noted that the drop in computer-related businesses in the US, like computer repair and IT, may be partially due to the fact that Americans are focusing and relying more on their phones. Meanwhile, gas stations have gone up, due to the fact that they’re less affected by short-term trends.

Yelp’s YEA is a measure of local economy made via the analysis of the number of businesses and the interest level of consumers across the categories on its platform, measured through reviews, check-ins and page views. Yelp reports that it has listings for millions of businesses across the US, with 34 million monthly users on its app, plus 75 million on mobile.

Bialik explains that small businesses, on their own, don’t account for a big share of the economy of the US, but all of them together, accounts for so much of the country’s business, and consumer spending.


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