The next disruption happened in 1992, after a full 10 years of recovery, so the relative level of unemployment had fallen back into the normal range, but was still high. The following recovery was 11 years long, so that by 2003, the level of unemployment, relative to insured unemployment, had fallen to below the level of the early 1970's.
|Normal UE = total UE predicted by short term UE|
At this point, the excess unemployment, relative to insured unemployment, is roughly divided in half. Half of it could be related to the shortened business cycle that has led to a persistent increase in uninsured unemployment, similar to the 1980s, which appears to slowly decline as the business cycle lengthens. The other half appears to be related to the unique feature of very long-term unemployment, regarding which there is no American precedent with which to anchor our expectations.
Given these factors, and given that exit rates from short and medium term unemployment should now be unaffected by EUI policies, monthly employment reports will have somewhat less importance, going forward. Regular unemployment is roughly 5.0% now, and should slowly decline to 4.0% or even less if we can manage to maintain the recovery for another, say, 5 years. The other approx. 0.8% of reported unemployment is very long term, and presumably marginally attached to the labor force. While it's decline has been fairly linear for 2 to 3 years, at a rate that would burn it off by early 2016, its further decline and the destination of the workers who are leaving the category, may be difficult to track and may be only tangentially related to other factors at work in the economy.
I may focus less on monthly employment as a result.