This graph shows the bullish indications from insured unemployment even more starkly. This is the graph I have been using, comparing insured and total unemployment rates. Now, I have added the unemployment forecast indicator. We can see how reasonably this indicator has predicted unemployment over the previous 18 months. With the continued decline in insured unemployment so far in September, this indicator forecasts September unemployment at 5.6%. That would be quite a decline.
This forecast includes a linear decline in very long term unemployed. The measured number of VLTUE had declined linearly along with the forecast until the last couple of months. There is always some noise in this data. But, even in an unrealistic worst case, where VLTUE completely stalls at its current level, all but about 0.2% of the forecasted decline has already happened, so, at most, the forecast would suggest an unemployment rate of about 5.8%.
I think it is very likely that we will get our gap down this month. The question is how far below 6% will we get.
Excellent blogging.
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