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Time series analysis: Linear trend

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THE FOLLOWING TIME SERIES DATA REPRESENTS THE MEAN YEARLY US UNEMPLOYMENT RATE BETWEEN JANUARY 1981 AND OCTOBER 2008 (OBTAINED FROM THE U.S. BUREAU OF LABOR STATISTICS):
Year U.S. Unemployment Rate (%)
1981 7.62
1982 9.71
1983 9.60
1984 7.51
1985 7.19
1986 7.00
1987 6.18
1988 5.49
1989 5.26
1990 5.62
1991 6.85
1992 7.49
1993 6.91
1994 6.10
1995 5.59
1996 5.41
1997 4.94
1998 4.50
1999 4.22
2000 3.97
2001 4.76
2002 5.78
2003 5.99
2004 5.53
2005 5.08
2006 4.63
2007 4.61
2008 6.1

A) Plot the time series on a line chart and show the trendline for unemployment rate. [Use Megastat, Correlation/regression, scatterplot].
B) Does the trend line show an increase, decrease or no change in the unemployment rate during 1981-2008?
C) Determine the linear regression equation for the time series.
D) Estimate unemployment rate for the next five years.

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Solution Summary

The solution provides step by step method for the analysis of time series data . Formula for the calculation and Interpretations of the results are also included.

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