29 January 2016
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 December 2015 was 4.3%, unchanged
from September and roughly constant since April 2015.
The forecasts are summarized in Figure 1 and Table 1. The
point forecast is for the unemployment rate to steadily increase for the next
year, to 5.4% by December 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 6.7% by December 2016. There is
also a significant possibility that the unemployment rate could stay roughly
constant. The 50% forecast intervals refine this uncertainty, showing that it
is unlikely the unemployment rate will not increase to last least 4.7% by the
end of summer 2016 or increase to over 6.0% by the end of 2016. Overall, the
forecast is for the unemployment rate to increase of the next year, at least
mildly and possibly significantly.
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% |
|
|
|
2016:1 |
|
4.4% |
(4.4%, 4.5%) |
(4.3%, 4.5%) |
2016:2 |
|
4.5% |
(4.4%, 4.6%) |
(4.3%, 4.7%) |
2016:3 |
|
4.6% |
(4.4%, 4.8%) |
(4.2%, 4.9%) |
2016:4 |
|
4.7% |
(4.5%, 5.0%) |
(4.2%, 5.2%) |
2016:5 |
|
4.8% |
(4.5%, 5.1%) |
(4.2%, 5.4%) |
2016:6 |
|
5.0% |
(4.5%, 5.3%) |
(4.2%, 5.7%) |
2016:7 |
|
5.1% |
(4.6%, 5.4%) |
(4.2%, 5.8%) |
2016:8 |
|
5.1% |
(4.7%, 5.5%) |
(4.3%, 6.0%) |
2016:9 |
|
5.2% |
(4.7%, 5.6%) |
(4.3%, 6.2%) |
2016:10 |
|
5.3% |
(4.7%, 5.7%) |
(4.3%, 6.3%) |
2016:11 |
|
5.3% |
(4.7%, 5.9%) |
(4.2%, 6.6%) |
2016:12 |
|
5.4% |
(4.7%, 6.0%) |
(4.2%, 6.7%) |
Previous Forecasts