New Model to Predict Unemployment Sees Rate at 8.1%

Ben Casselman
Wall Street Journal
Oct 3, 2012

The big monthly jobs report doesn’t come out until Friday, but no need to wait until then to know September’s unemployment rate: 8.1%.

At least, that’s the best guess of economistsRegis Barnichon andChristopher Nekarda, who in a paper last month laid out a new method for forecasting the unemployment rate. Mr. Barnichon, of the Spanish research institute CREI, and Mr. Nakarda, of theFederal Reserve, plan to start posting unemployment projections based on the new technique in the coming months. Until then, they provided Real Time Economics with a look at their forecast for Friday’s jobs report.

The projection itself, made last Friday, isn’t particularly remarkable. An unemployment rate of 8.1% would represent no change from August, and is also the consensus forecast of economists surveyed by Dow Jones Newswires. Messrs. Barnichon and Nekarda also forecast a very gradual improvement in the months ahead: 8% in October and November, 7.9% in December, and an incremental drop to 7.1% over the course of the next year (although the authors caution in their paper that their projections become less accurate as they go further out in time).

Full article here

This article was posted: Wednesday, October 3, 2012 at 3:12 am

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