Originally posted on Global Risk Insights:
With benefits for the long-term unemployed ending at the beginning of 2014, forecasters are downgrading US growth projections.
For 1.3 million long-term unemployed workers in the US, 2014 starts with a shock. Federal jobless benefits for those who have been out of work for more than twenty-six weeks, which have been in effect since 2008, are set to expire. Renewing the program – which pays an average of $300 per week to Americans, who have been unable to find work for more than six months in a depressed job market – was a Democratic priority in the recent budget negotiations, but was eventually left out due to a Republican demand.
Jobless benefits became a proxy for the debate over the size of the federal government, and in the process the program’s impact on economic recovery was lost. The expiration of the program is forecasted to be a drag on an otherwise optimistic outlook for consumer spending and GDP growth in 2014.