Financial and Economic Forecasting

Financial and Economic

Forecasting

The Civilian Unemployment Rate

By: Doug Hanig

Due: 5/15/12

Doug Hanig

Professor Hecht

Finc-411

3/12/12

Part 1

A. Civilian Unemployment Rate (FRED Database)

Government Agency: US Department of Labor: Bureau of Labor statistics

B. The government would be interested in this forecast for many reasons. By forecasting the civilian unemployment rate, the government can have an idea of how stable the economy will be in the upcoming years.

C.

D.

[pic]

Correlation Coefficient: -.068522

These two variables are slight negatively correlated meaning as the Unemployment Rate decreases, Real GDP will increase by .068522%.

| |

Part 2

a. So What? Who Cares?

In the economy today, the unemployment rate is one of the most viewed at statistics in judging the state of the economy. We all figure that having more people with jobs will result in a stable and successful economy. The unemployment rate is defined as the percentage of the total labor force that is unemployed but actively seeking employment and willing to work.
Source: http://www.investopedia.com/terms/u/unemploymentrate.asp#ixzz1unn2kTpH

http://filipspagnoli.wordpress.com/stats-on-human-rights/statistics-on-gross-domestic-product-correlations/

The article above tests the relationship between unemployment and RGDP. The author specification was that the two variables would be negatively correlated. This would mean as Unemployment decreases, Real GDP would increase. GDP is another economic indicator of the economy and the study found that the two have an inverse relationship with each other.

http://allfinancialmatters.com/2010/02/17/unemployment-rate-vs-the-sp-500-index-part-2/

This article tested the