How are the birth/death adjustment amounts calculated?
During the net birth/death modeling process, simulated monthly probability estimates containing continuous and imputed employment over a 5-year period are created and compared with population employment levels that contain actual business births and deaths along with the continuous units. Moving from a simulated benchmark, the differences between the series across time represent a cumulative error component. Those residuals are converted to month-to-month differences and are used as input series to the modeling process. Models are fit using X-12 ARIMA. Outliers, level shifts, and temporary ramps are automatically identified. Five models are tested, and the model exhibiting the lowest average forecast error is selected for each series.
