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Forecast giving unexpected value

  1. #1
    Forum Expert Tsjallie's Avatar
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    Forecast giving unexpected value

    I have this table with some statistics until 2014.
    Starting with 2015 I use the forecast function to get numbers for the years to come (2015-2013).
    However the forecast for 2015 gives an unexpected result which I cannot explain.
    Added a graph to illustrate. I wouldn't expect the initial increase to be that steep. Rest of the values seem ok.

    Any suggestions on why forecast gives this result?
    May be I'm not using the right function?
    Must admit that I'm a dummy on statistical functions. So please be gentle ;-)
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    Tsjallie




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    Forum Moderator Glenn Kennedy's Avatar
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    Re: Forecast giving unexpected value

    FORECAST takes a simple linear regression of the actual data and simply extrapolates it forwards. I've added another dataset (previous years only - in red) and added a linear trend line (black). You can see that FORECAST has simply extended that.

    As to a better way, i couldn't comment, as forward projections for something lioke this are a bit of a dark art/voodoo....
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    Glenn




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    Forum Expert Tsjallie's Avatar
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    Re: Forecast giving unexpected value

    Hi Glenn,
    thx for the quick response and clear explaination. Confirms what I already was afraid of: the function looking to continue the straight line asap.

  4. #4
    Forum Moderator Glenn Kennedy's Avatar
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    Re: Forecast giving unexpected value

    You're welcome, and Thanks..

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