Expiring jobless benefits to lower US unemployment rate
WASHINGTON (REUTERS) - The US unemployment rate could fall substantially early next year as belt-tightening in Washington throws more than a million long-term unemployed Americans off the benefit rolls.
The loss of benefits could spur former recipients to either drop out of the labor force or accept jobs they previously would not have considered. Some economists estimate this could lower the current unemployment rate of 7.3 per cent by as much as half a percentage point.
"The lapsing of the program could lower the unemployment rate by perhaps 0.25-0.50 percentage point, with much of the effect coming through reduced labor force participation, rather than increased employment," said Michael Feroli, an economist at JPMorgan in New York.
To receive jobless benefits, Americans are required to be actively looking for work. That is also a key factor that defines who is unemployed, as opposed to those who have dropped out of the labor force.