Unemployment Prediction for July
July 24th, 2010Right to it - my July unemployment rate prediction (seasonally adjusted) is 9.3%, a drop of 0.2% from the previous month. The published Market Watch consensus estimate is 9.5%. Another interesting month since my prediction differs from consensus - so we’ll see.
Below is a graph that puts this into the unemployment trend context.
You’ll see that although the unemployment rate has been falling over the last few months, the model indicates the rate of reduction is slowing slightly. This is also evident in the polling numbers at the Gallup website.
OK, how accurate is this prediction compared, say, to consensus predictions. Let’s briefly look at my previous predictions in comparison to the monthly consensus predictions published on the Market Watch website.
First, the accuracy of the published consensus forecasts from Market Watch:
| May | June | |
| Market Watch Published Concensus Forecast % | 9.8 | 9.7 |
| Actuals % (Seas Adj.) | 9.7 | 9.5 |
| Error | 0.1 | 0.2 |
Now, my past monthly predictions:
| May | June | |
| My Published Forecast % | 9.7 | 9.5 |
| Actuals % (Seas Adj.) | 9.7 | 9.5 |
| Error | 0.0 | 0.0 |
So it looks like my prediction model, which uses Gallup polling data as the sole source of information, is very competitive with consensus estimates. In fact, my model right now appears to be slightly better, although it’s really too early to tell - we’ll keep these comparisons going to see how it all holds up over time.
It’s worth noting that even if the accuracy of my model turns out, over the long haul, to be the same accuracy as consensus estimates, there is one very distinctive and important difference between my model and consensus estimates. My model is based solely on Gallup polling data (uses no other inputs or data source), as opposed to the consensus estimates done by a group of professionals who use multiple data sources. So my model is far simpler, and if accurate, could provide a faster and easier to understand method of prediction.
Alright, until next time…