The Unusual Becomes the Norm -- CNBC Contributor

Updates

May 27, 2011: WSJ -- Unemployment: The New Norm

Even as the economy recovers, the days of 5% unemployment may be gone for good.

A chorus of economists and labor market observers say that the "natural" or "structural" rate of unemployment has shifted up, meaning that Americans looking for work should get used to having a harder time finding it. The unemployment rate is currently 9% and could take until 2016 to reach the natural rate.

The so-called natural unemployment rate is somewhere around 7%, according to Mark Vitner, a senior economist at Wells Fargo. Other economists peg the natural unemployment rate somewhere between 5.5% and 7%. They said the figure will be held higher by a skills mismatch in the labor market that has been growing since the 1970s, the recent extension of unemployment benefits and the 2009 minimum wage increase.

Original Post

Idle chatter while waiting for the market to open.

This is an interesting post-script to something I posted a few days ago in the comment section of a posting regarding unemployment numbers.

In that comment I stated two things:

• a) The unusual has become the norm: I stated that 10% unemployment / 20% unemployment is the new norm.
• b) Homeowners have accepted the fact that the value of their homes will "never" rise.

The guest host on CNBC this morning is Richard Bernstein, former Merrill Lynch Chief Investment Strategist and now CEO of his own firm and regular contributor to CNBC. At 7:20 a.m. EST just before the break he made these very surprising statements in a short 30-second blurb:

• a) The unusual has become the norm. He did not mention specifics
• b) He said homeowners should know that house values will sink forever. I can't remember the exact words, but I do believe "sink forever" was the exact phrase.

Both of us may be using a bit of hyperbole to make a point. It's one thing for an amateur to make those comments on a blog that few read, but to hear almost the same thing from a former Merrill Chief Investment Strategist on the "only" 24-hour cable business network is something quite different.

Updates

May 10, 2011: Zillow reports the number is now up to 28% -- the number of US homes "under water."

May 9, 2011, 3:30 p.m.: I posted the above earlier this morning. Now, I see on a link on the Drudge Report: "Housing Crash is Getting Worse." Yup, the unusual is becoming the norm. The "unusual" in this case is the continuing fall in the price of homes. By the way, during the budget fight in Wisconsin, a pundit noted that once your house is paid for, you continue to pay rent to your landlord, the teachers' union. And like most rent, it increase every year.