17 December 2009
This memo reports a 12month 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).
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.
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, dropping to 7.4% by October of 2010. The 80% forecast intervals
show that there is considerable additional uncertainty. The unemployment rate
may fall as low as 6.0%, or raise as high as 9.2% over this period. The 50%
forecast intervals refine this uncertainty, showing that it is unlikely that
the unemployment rate will rise above 8.6%.
Figure 1: Wisconsin Unemployment Rate Forecasts
TABLE 1: Wisconsin
Unemployment Rate Forecasts

History 
Point Forecast 
50% Interval Forecast 
80% Interval Forecast 
2009: 8 
8.8% 



2009: 9 
8.4% 



2009:10 
8.4% 



2009:11 

8.4% 
(8.2%, 8.6%) 
(8.1%, 8.7%) 
2009:12 

8.3% 
(8.0%, 8.5%) 
(7.9%, 8.8%) 
2010: 1 

8.3% 
(7.8%, 8.6%) 
(7.7%, 8.9%) 
2010: 2 

8.1% 
(7.6%, 8.5%) 
(7.4%, 8.8%) 
2010: 3 

8.1% 
(7.4%, 8.5%) 
(7.2%, 8.9%) 
2010: 4 

7.9% 
(7.2%, 8.4%) 
(7.1%, 8.9%) 
2010: 5 

7.9% 
(7.1%, 8.4%) 
(6.9%, 9.0%) 
2010: 6 

7.8% 
(6.9%, 8.4%) 
(6.7%, 9.1%) 
2010: 7 

7.8% 
(6.8%, 8.4%) 
(6.6%, 9.1%) 
2010: 8 

7.7% 
(6.7%, 8.3%) 
(6.4%, 9.2%) 
2010: 9 

7.6% 
(6.5%, 8.2%) 
(6.2%, 9.1%) 
2010:10 

7.4% 
(6.3%, 8.1%) 
(6.0%, 9.0%) 