Letting Unemployment benefits expire could slow recovery

Failure to pass unemployment insurance extension could cost billions, reports say

Los Angeles Times:

11/19/10

"...Letting the nation's unemployment benefits expire could drain billions from the economy and cost millions of jobs, according to two reports out this week. On Thursday, House Republicans voted to deny an unemployment benefits extension, unhappy with the method planned to fund it.

Ending federal extensions would drain the economy of $80 billion of purchasing power, according to a report by the U.S. Congress Joint Economic Committee. Every dollar spent on benefits increases the gross domestic product by $1.60, the report said.

'Workers receiving unemployment insurance payments are typically cash-strapped and will spend their benefits quickly,' the report said. They spend about $6.5 billion a month on the local economy to buy essentials such as food, clothing and utilities.

'A failure to extend the unemployment insurance program could hamper the fragile recovery,' the report said. It predicts that consumer spending will fall by $50 billion over the next year if benefits are not extended, and that economic growth will be reduced by 0.4 percentage points by February 2011."

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Posted by Chuck Bell at 4:48 AM