End of Extended Benefits May Lower U.S. Jobless Rate [View all]
By Shobhana Chandra on May 21, 2012
The declining U.S. jobless rate may soon get another push downward as Americans lose extended unemployment benefits.
From April 7 through May 12, about 370,000 Americans in 23 states stopped getting the benefits, which provide payments for as long as 99 weeks, according to estimates from the National Employment Law Project. People in the remaining six states and the District of Columbia who still qualify may lose eligibility by September, bringing the program to an end, the report showed.
Some recipients who lose their benefits may decide to accept jobs they view as less than ideal. Others may give up looking for work and drop out of the labor force, eliminating them from the ranks of the jobless. Those outcomes may trim the unemployment rate by 0.1 percentage point to 0.2 point in the next few months, according to economists Dean Maki at Barclays and Michael Feroli at JPMorgan Chase & Co.
“The unemployment rate would be the place where the effect is likely to show up most,” said Maki, chief U.S. economist at Barclays in New York and a former economist at the Federal Reserve. “It may put some modest downward pressure” on the jobless rate.