While Lester Holt got shot down in raising the idea of a "new norm" relative to the level of unemployment, I think there is an argument that higher unemployment, lower economic growth and a greater inability of government action to effect these measures is not only possible but already underway.

I say that for a couple reasons...

• Rapidly increasing American productivity (man hours to produce a unit of production) continues to grow faster than the demand for goods, even from an increasing population. By definition, that means higher unemployment.

• In the last ten years or so, the stimulative action taken by the government hasn't worked as it had for decades before. "Supply side economics" (the "trickle down" effect) hasn't worked as it had in the past.
  

  As an example, in the post WWII period when the U.S. savings rate was near or at zero, any reduction in taxes or manipulation of the interest rate had an almost immediate effect on consumer confidence and demand, resulting in increased production and increased employment. Beginning in the 1990's the U.S. savings rate has edged upwards from zero to about 4% where it is now. And productivity continues to improve faster than population growth, as noted above.
  
  The effect began to be demonstrated with the several "Bush tax cuts". They were intended to quickly increase economic activity and employment, but each successive cut had increasingly tepid results. The ineffectiveness of government intervention peaked with the 2008 tax rebates. All that happened with that money was that the savings rate increased almost immediately. Consumers used their newfound tax rebates to either pay off debt or add to their savings or investments. They did not do what the government intended and expected--go out an spend the money with the result of a quick increase in economic activity and employment.

It would appear that for a variety of reasons, not the least of which is an erosion in confidence in the government's ability to manage the economy, the conduct of consumers has changed to a "new norm". They are less confident in their political leaders and far less certain as to the continued strength of the U.S. economy and our ability to compete internationally.

The result continues to be for consumers to increase saving or investment in lieu of increased spending. Combined with our increased productivity, increased unemployment or under-employment is the result. Until something in the equation I've described changes, that isn't likely to change.

The government is running out of tools to use to stimulate economic activity. With the rates on U.S. Treasury bills at only 1.5%, where they closed yesterday, there is little more that the Fed can do in the area of manipulating interest rates. They have only a couple more tools to use--increasing the money supply ("economic easing") or stimulating the economy with increased government spending and employment. Watch and listen carefully for both to begin to enter the political discussion.

Whether the current 8% unemployment rate is the new "norm" is certainly in question. But it's almost certain that normal unemployment won't return to the 3-4% level anytime in the forseeable future.