22 December 2011
This memo reports a 12-month forecast for the seasonally
adjusted Wisconsin unemployment rate. In addition to point forecasts (the
expected future value of the unemployment rate), the memo also reports 50% and
80% forecast intervals (probable ranges for future values).
The unemployment rate in November 2011 was 7.3%, a major
one-month fall, after holding roughly steady for 4 months and increasing in the
first half of the year, following a steady fall during 2010.
The forecasts are summarized in Figure 1 and Table 1. The
point forecast is for the unemployment rate to stay roughly constant over the
next year. The 80% forecast intervals show that there is considerable
additional uncertainty. In particular, there is a possibility that the
unemployment rate will increase to 8.6% by November 2012. There is also a
significant probability that the unemployment rate will continue to fall, as
low as 6.0% by November of 2012. The 50% forecast intervals refine this
uncertainty, showing that it is unlikely that the unemployment rate will rise
over 7.9%, and may fall to as low as 6.6% within a year.
A 50% forecast interval is designed to contain the future
unemployment rate with 50% probability. It is just as likely for the rate to
fall in this interval as out of it. This is the smallest possible interval
which has even odds of containing the future rate. We can think of this
interval as “likely” to contain the future rate.
An 80% forecast interval is designed to contain the future
unemployment rate with 80% probability. We can think of this interval as
“highly likely” to contain the future rate. The 80% interval is designed so
that there is a 10% chance that the future value will be smaller than the
forecast interval, and a 10% chance that the future value will be larger than
the forecast interval.
Figure 1: Wisconsin Unemployment Rate Forecasts
TABLE 1: Wisconsin
Unemployment Rate Forecasts
|
History |
Point Forecast |
50% Interval Forecast |
80% Interval Forecast |
2011:1 |
7.4% |
|||
2011:2 |
7.5% |
|||
2011:3 |
7.4% |
|||
2011:4 |
7.3% |
|||
2011:5 |
7.4% |
|||
2011:6 |
7.6% |
|||
2011:7 |
7.8% |
|||
2011:8 |
7.9% |
|||
2011:9 |
7.8% |
|||
2011:10 |
7.7% |
|||
2011:11 |
7.3% |
|||
2011:12 |
|
7.3% |
(7.2%, 7.3%) |
(7.2%, 7.3%) |
2012:1 |
|
7.2% |
(7.1%, 7.3%) |
(7.0%, 7.4%) |
2012:2 |
|
7.2% |
(7.0%, 7.3%) |
(6.9%, 7.4%) |
2012:3 |
|
7.2% |
(7.0%, 7.4%) |
(6.8%, 7.5%) |
2012:4 |
|
7.2% |
(7.0%, 7.4%) |
(6.8%, 7.6%) |
2012:5 |
|
7.2% |
(7.0%, 7.4%) |
(6.8%, 7.6%) |
2012:6 |
|
7.2% |
(6.9%, 7.5%) |
(6.6%, 7.8%) |
2012:7 |
|
7.2% |
(6.8%, 7.6%) |
(6.5%, 8.0%) |
2012:8 |
|
7.3% |
(6.7%, 7.7%) |
(6.3%, 8.2%) |
2012:9 |
|
7.3% |
(6.7%, 7.8%) |
(6.2%, 8.5%) |
2012:10 |
|
7.3% |
(6.6%, 7.9%) |
(6.1%, 8.6%) |
2012:10 |
|
7.3% |
(6.6%, 7.9%) |
(6.0%, 8.6%) |
Previous Forecasts