21 December 2015
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 2015 was 4.3%, unchanged
from September and roughly constant for the eight month, following a steady
decline since it had locally peaked at 7.1% in February 2013.
The forecasts are summarized in Figure 1 and Table 1. The
point forecast is for the unemployment rate to stay roughly constant for the
next three months, and then increase slowly over the following nine months, to
5.2% by November 2016. The 80% forecast intervals show that there is
considerable additional uncertainty. There is a possibility that the
unemployment rate could increase as high as 6.4% by November 2016. There is
also a significant possibility that the unemployment rate could stay roughly
constant or drop slightly to 4.1%, though it is unlikely to drop below 4.1%
before next September. The 50% forecast intervals refine this uncertainty,
showing that it is unlikely the unemployment rate will fall below 4.2% during
the next year or increase to over 5.0% before June. Overall, the forecast is
that it is unlikely for there to be a further decrease in the unemployment
rate, and there is considerably more likelihood of an increase in the
unemployment rate than a decrease.
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 |
2015:1 |
5.0% |
|
|
|
2015:2 |
4.8% |
|
|
|
2015:3 |
4.6% |
|
|
|
2015:4 |
4.4% |
|
|
|
2015:5 |
4.6% |
|
|
|
2015:6 |
4.6% |
|
|
|
2015:7 |
4.6% |
|
|
|
2015:8 |
4.5% |
|
|
|
2015:9 |
4.3% |
|
|
|
2015:10 |
4.3% |
|
|
|
2015:11 |
4.3% |
|
|
|
2015:12 |
|
4.3% |
(4.2%, 4.3%) |
(4.2%, 4.3%) |
2016:1 |
|
4.3% |
(4.2%, 4.4%) |
(4.1%, 4.4%) |
2016:2 |
|
4.4% |
(4.3%, 4.5%) |
(4.1%, 4.6%) |
2016:3 |
|
4.5% |
(4.3%, 4.7%) |
(4.1%, 4.8%) |
2016:4 |
|
4.6% |
(4.4%, 4.8%) |
(4.2%, 5.0%) |
2016:5 |
|
4.7% |
(4.4%, 4.9%) |
(4.2%, 5.2%) |
2016:6 |
|
4.8% |
(4.5%, 5.1%) |
(4.2%, 5.4%) |
2016:7 |
|
4.9% |
(4.5%, 5.2%) |
(4.2%, 5.5%) |
2016:8 |
|
5.0% |
(4.6%, 5.3%) |
(4.2%, 5.7%) |
2016:9 |
|
5.0% |
(4.5%, 5.4%) |
(4.1%, 6.0%) |
2016:10 |
|
5.1% |
(4.5%, 5.6%) |
(4.0%, 6.2%) |
2016:11 |
|
5.2% |
(4.5%, 5.7%) |
(4.0%, 6.4%) |
Previous Forecasts