Wisconsin
Unemployment Rate Forecast
Bruce E. Hansen
T. Haavelmo Professor
Department of
Economics
University of Wisconsin
7 April 2010
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 forecasts are summarized in Figure 1 and Table 1. The
point forecast is for the unemployment rate to decline steadily over the next
twelve months, starting in April, dropping to 7.4% by February of 2011. The 80%
forecast intervals show that there is considerable additional uncertainty. The
unemployment rate may fall as low as 6.0%, or rise to 9.0% and not fall
meaningfully over the next year. The 50% forecast intervals refine this
uncertainty, showing that it is unlikely that the unemployment rate will rise
above 8.7%, and more likely than not fall to at least 8.0% by next February.
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 large 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 |
|
2009:10 |
8.7% |
|
|
|
|
2009:11 |
8.6% |
|||
|
2009:12 |
8.5% |
|||
|
2010: 1 |
8.7% |
|||
|
2010: 2 |
8.7% |
|||
|
2010: 3 |
|
8.7% |
(8.5%, 8.7%) |
(8.5%, 8.8%) |
|
2010: 4 |
|
8.6% |
(8.4%, 8.7%) |
(8.3%, 8.9%) |
|
2010: 5 |
|
8.5% |
(8.1%, 8.7%) |
(7.9%, 8.9%) |
|
2010: 6 |
|
8.3% |
(7.8%, 8.6%) |
(7.6%, 8.9%) |
|
2010: 7 |
|
8.2% |
(7.6%, 8.6%) |
(7.4%, 8.9%) |
|
2010: 8 |
|
8.1% |
(7.3%, 8.5%) |
(7.1%, 8.9%) |
|
2010: 9 |
|
7.9% |
(7.1%, 8.5%) |
(6.9%, 9.0%) |
|
2010:10 |
|
7.8% |
(6.9%, 8.4%) |
(6.7%, 9.0%) |
|
2010:11 |
|
7.7% |
(6.8%, 8.4%) |
(6.6%, 9.1%) |
|
2010:12 |
|
7.7% |
(6.7%, 8.3%) |
(6.4%, 9.1%) |
|
2011:1 |
|
7.6% |
(6.5%, 8.2%) |
(6.2%, 9.1%) |
|
2011:2 |
|
7.4% |
(6.2%, 8.0%) |
(6.0%, 8.9%) |
Previous Forecasts