New tool forecasts unemployment

Analysts use year-over-year data to predict rates in Routt, Moffat

Predicted unemployment

Routt County

■ April: 10.8 percent

■ May: 11.8 percent

■ June: 10.9 percent

Moffat County

■ April: 9.3 percent

■ May: 8.9 percent

■ June: 9.1 percent

Source: Yampa Valley Partners Regional Economic Forecast

— Scott Ford and Yampa Valley Partners are trying to add perspective to the inexact science of unemployment figures.

The statistics are a challenging metric partly because of the way unemployment is calculated, said Ford, director of the Routt County Economic Development Co­­operative. Routt and Moffat counties are too small to get precise figures because the numbers are based only on active unemployment claims. Also, the counties’ smaller labor forces can result in manic swings in jobless rates.

“Following unemployment percentages is valuable, but it’s chaotic, especially in smaller places because small numbers have such a big impact,” Ford said.

But he and Kate Nowak, of Yampa Valley Partners, have created a quarterly newsletter to try to add context to the conversation.

The letter released last week includes predictions about retail sales, employment, real estate, transportation, construction and energy in Northwest Colo­rado.

The information includes a look at past unemployment and, more important, a forecast of the next three months’ numbers.

The team used a method developed by Robert Fountain, of Cali­­fornia State Uni­­ver­­sity, Sacra­mento, to create the predictions.

Here’s how it works: They take the number of people with jobs in, say, February 2010, and divide it by that same figure for February 2009. They then take the reported labor force in February 2010 and divide it by the reported labor force in February 2009.

They subtract the second number from the first. If the difference is less than 1, that signals jobs-related economic stress.

Each figure for each month — compared with the same month the previous year — becomes a data point plotted on a graph.

The comparisons allow Ford and Nowak, or whoever is looking at the data, to observe trends and make forecasts. They expect Routt County’s unemployment to be roughly 10.8 percent in April, 11.8 percent in May and 10.9 percent in June. It was 7 percent in February, according to figures released late last month by the Colorado Department of Labor and Employment.

The newsletter explains the calculations and points out the flaws of raw unemployment percentages, stating, “Although this is an important number, it does not tell the full story because it does not recognize the fluid nature of employment. To recognize the fluid nature, a useful assessment is to graphically compare the twelve-month percentage change in the number of employed persons with the twelve-month percentage change in the civilian labor force.”

The measurements still aren’t precise, Ford said. Employment statistics don’t differentiate between part- and full-time jobs and don’t reveal whether one person holds more than one job.

Also, the federal government has extended unemployment benefits, so some people are waiting longer before settling for a job that may be outside their field or pay less, Ford said.

“These programs have great value, but they will result in unemployment staying higher longer,” he said.

The good news is that the outlook is positive, Ford said. He expects the indicator to be above 1 in the fourth quarter of 2010 or the first quarter of 2011 for Routt County.

“It allows us to see the change in context,” Ford said. “It doesn’t mean we won’t have economic stress — we certainly are.”

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