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Outline
Introduction
Data Analysis
Forecasting Models
Summary
What is Unemployment?
People able,
available and willing
to find work and
actively seeking
work, but not
employed
The unemployed are
included in the labor
force
Types of Unemployment
Who Is NOT
Counted as
unemployed?
The
The
Underemployed
Underemployed
Those with
with part-time
part-time
Those
or seasonal
seasonal jobs
jobs who
who
or
would rather
rather have
have
would
full-time jobs.
jobs.
full-time
Discouraged
Discouraged
Workers Those
Those who
who
Workers
have officially
officially given
given
have
up looking
looking for
for work
work
up
and are
are discouraged.
discouraged.
and
Measuring
As of February 2015, NC
Unemployment
US Bureau of Labor Statistics measures
unemployment was 5.3% of the
unemployment using Current popular
survey(CPS) and Current employment
statistics survey (CES)
To be counted in CPS
employment data, surveyed
persons must be
age 16 or older
Unemployed
includes
surveyed persons who are
jobless and actively seeking a
job
Surveyed persons
who are
labor force
Totals in Thousands, values seasonally adjusted
8.7
148.3
92.9
Unemploye
d
Employed
Not in
labor
force
Source : http://www.bls.gov/eag/eag.nc.htm
http://www.frbsf.org/education/teacher-resources/datapost
Education Group
FRBSF Economic
Unemployment Rate
Seasonally adjusted (%), Jan. 2005-Dec. 2014
10.0
8.0
6.0
Unemployment rate %
4.0
2.0
Great Recession
12.0
0.0
Time
Source : http://data.bls.gov/timeseries/LASST370000000000003?
data_tool=XGtable
Mar
2010
11.3%
Dec
2014
5.4%
Data Analysis
First dataset
represents the
monthly
unemployment rate
from January 2009 to
Unemployment Rate (%)
December
2014
Data after the great
recession
12
11
10
Rate
8
7
6
5
Jan-09
Jan-10
Jan-11
Jan-12
Time
Jan-13
Jan-14
Jan-15
Data Analysis
Outside
UCL
0.8
0.4
Autocorrelation
Trend
pattern
0.0
-0.4
-0.8
-1.2
Lag
Forecasting Models
considered
Decomposition Method
Multiple Linear Regression Method
Month, Year and Labor Force
United State Unemployment, North
Carolina Population Growth Rate and
Time
United States Unemployment and Time
Decomposition MethodLinear
Unemployment Rate(%)
12
Unemployment rate
6
4
2
0
Time
Decomposition Method
-Exponential
Unemployment Rate(%)
12
10
Unemployment rate
6
4
2
0
10
20
30
40
Time
50
60
70
80
Decomposition Method
Polynomial
Unemployment Rate(%)
12
10
8
Unemployment Rate
6
4
2
0
Time
Decomposition method
Forecasting Errors
Errors
Linear
Exponenti Polynomia
al
l
MAD
0.061
0.609
0.203
MSE
0.372
0.561
0.072
MAPE %
0.061
0.071
0.023
MPE %
-0.007
-0.013
-0.011
Lowest
Errors
6
4
2
0
Month
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
UR %
5.17
4.99
4.81
4.63
4.44
4.25
4.06
3.86
3.67
3.47
3.26
3.06
High R2 Value
Significance
values not in the
critical range
No sign change
between UL and
LL
Reject H0
4 outliers, Removing
outliers might misrepresent the data pattern
Validation of Model
R22 =0.98
C00 0
C11 1
Which is good
Spread
Around not
random and
seems to
follow a
pattern which
is not good
Forecasting equation
Model Predicts unemployment rate will go down
Data Analysis
12
11
10
9
8 f(x) = 0.19x - 383.47
R = 0.39
7
6
5
4
1990
1993
1996
1999
2002
Year
2005
2008
2011
2014
Data Analysis
Cyclical
pattern
(uneven
distance
Autocorrelation Function for Annually Unemployment Rate
peaks and
lows)
1.0
0.8
0.6
0.4
0.2
0.0
Autocorrelation
-0.2
-0.4
-0.6
-0.8
-1.0
1
10
11
12
Lag
13
14
15
16
17
18
19
20
21
22
23
Collinearity
MatrixY
X1
X2
X3
NC Unemployment rate
(Y)
Time (X1)
-0.439
0.373
-0.504
NC Population growth
rate (X2)
US Unemployment rate
(X3)
0.623 -0.606
0.938
Calculation of US
Unemployment rate
Only
model is
Conclusions
Two models may be used for
forecasting
1.
fitting
Pros:Decomposition Polynomial
Cons:
Low Errors and may be useful for
predicting for near future
Depend on US unemployment
prediction
Does not capture cyclic
patterns