Will expiring unemployment benefits hurt the economy?
Thu, 21 Jul 2011 00:20:00 GMT —
While all the talk in Washington right now is about the immediate need to raise the nation's debt ceiling, another deadline looms.
By the end of this year, extended jobless benefits will expire.
Economists predict that will zap $37 billion from the economy.
Will that jolt the already fragile economy, and cause double dip recession?
KRCG's Facebook Crew spoke with local economists Wednesday to find out what they think.
Almost $2 of every $10 that went into Americans pockets last year were payments from jobless benefits, food stamps, Social Security, and so on.
But many of those dollars will disappear when jobless benefits expire at the end of the year.
Some of economists think that it could really hurt the already struggling economy.
"Some commentary on the cable news channels are saying if we just cut back on unemployment benefits than people would more actively seek work and they would accept more jobs and so on. But I just don't think that's a very realistic appraisal of an economy that's in the shadow of a huge recession, William Woods Assistant Professor of Economics Steve Huenneke said.
Federal Reserve Chairman Ben Bernanke said the expiring unemployment checks comes at a bad time because the most recent data shows continuing weakness in the labor market.
"Long term unemployment imposes severe economic hardships on the unemployed and their families, Federal Reserve Chairman Ben Bernanke said.
In 2008 and 2009 there were over 100,000 workers that lost their jobs in the state of Missouri.
But in 2010 that all changed because jobs started being created and not cut. That's still happening today.
"The unemployment rate has now dropped seven tenths of a one point. So it's gone from 9.5 percent to 8.8 percent, Department of Economic John Fougere said. We are watching that trend closely to see if that trend continues. We are certainly doing everything we can on the state side to make sure we're helping create an environment in the state that creates jobs and boast capital investment."
While Missouri TMs unemployment is slightly better than the nation's, some economists believe that the jobs have not come back yet.
"The unemployment rate always lags the business cycle. So it's probably a matter of years before our labor markets will recover, Huenneke said.
It's not just unemployment checks that are going away, the payroll tax cut and other programs intended to pump money into the economy are set to expire at the end of the year.
So tell us what you think. Will expiring unemployment benefits hurt the economy?
When unemployment runs out and benefits are trimmed, will it further hurt the economy?
Tonight at ten KRCG's Facebook Crew talks with economists to find out what they think.
So tells us what you think. Do you think the economy will get much worse before it gets better?