Wisconsin
Unemployment Rate Forecast
Bruce E. Hansen
T. Haavelmo Professor
Department of
Economics
University of Wisconsin
21 March 2013
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 January 2012 was 7.0%, rising from 6.7%
in December. During 2012, the unemployment rate has been roughly constant, ranging
between 6.7% and 7.1%. These reflect new revisions in the employment statistics
issued by the Bureau of Labor Statistics.
The forecasts are summarized in Figure 1 and Table 1. The
point forecast is for the unemployment rate to stay roughly constant, between
6.8% and 7.0% over the next 12 months. The 80% forecast intervals show that
there is considerable additional uncertainty. In particular, there is a
possibility that the unemployment rate could increase in the spring, possibly
to 7.6% by June 2013. There is also a significant probability that the
unemployment rate will continue to fall, as low as 6.0% by June 2013. The 50%
forecast intervals refine this uncertainty, showing that it is unlikely that
the unemployment rate will rise over 7.3%, and probably will not fall below 6.5%
in the same time period. Overall, the likelihood of further increases and
decreases are roughly comparable.
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 |
|
2012:1 |
7.1% |
|||
|
2012:2 |
7.0% |
|||
|
2012:3 |
6.9% |
|||
|
2012:4 |
6.9% |
|||
|
2012:5 |
6.9% |
|||
|
2012:6 |
7.0% |
|||
|
2012:7 |
7.0% |
|||
|
2012:8 |
7.1% |
|||
|
2012:9 |
6.9% |
|||
|
2012:10 |
6.8% |
|||
|
2012:11 |
6.8% |
|||
|
2012:12 |
6.7% |
|||
|
2013:1 |
7.0% |
|||
|
2013:2 |
|
7.0% |
(6.9%, 7.0%) |
(6.8%, 7.1%) |
|
2013:3 |
|
6.9% |
(6.8%, 7.1%) |
(6.6%, 7.2%) |
|
2013:4 |
|
6.9% |
(6.7%, 7.1%) |
(6.4%, 7.4%) |
|
2013:5 |
|
6.9% |
(6.6%, 7.2%) |
(6.2%, 7.5%) |
|
2013:6 |
|
6.9% |
(6.5%, 7.3%) |
(6.0%, 7.6%) |
|
2013:7 |
|
6.8% |
(6.4%, 7.3%) |
(5.9%, 7.6%) |
|
2013:8 |
|
6.8% |
(6.3%, 7.2%) |
(5.9%, 7.6%) |
|
2013:9 |
|
6.8% |
(6.3%, 7.2%) |
(5.9%, 7.6%) |
|
2013:10 |
|
6.8% |
(6.3%, 7.2%) |
(5.9%, 7.7%) |
|
2013:11 |
|
6.8% |
(6.3%, 7.2%) |
(5.9%, 7.7%) |
|
2013:12 |
|
6.8% |
(6.2%, 7.2%) |
(5.8%, 7.7%) |
|
2014:1 |
|
6.8% |
(6.2%, 7.2%) |
(5.8%, 7.8%) |
Previous Forecasts