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Budget leaves 1.3 million jobless out in the cold

Friday, Dec 13, 2013 - 02:16

Dec 13 - Emergency unemployment benefits are set to run out and will not be renewed in the budget making its way to the Senate, which is sure to put a squeeze on the long-term unemployed and the places where they shop. Conway G. Gittens reports.

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A cold reality faces millions of Americans - emergency long-term unemployment benefits are coming to an end. According to the White House, 1.3 million recipients will lose out by the end of the year after a bipartisan budget passed by the House fails to keep the cash coming. House Minority Leader Nancy Pelosi tried, but failed, to sell the economic merits of keeping the program alive. SOUNDBITE: HOUSE MINORITY LEADER NANCY PELOSI (DEMOCRAT) (ENGLISH) SAYING: "As far as unemployment benefits are concerned, the economic impact is clear: every dollar spent on unemployment benefits grows the economy by a $1.52, according to Moody's Analytics. A dollar-fifty for every dollar we spend and that's a conservative estimate." Some economists say as that cash evaporates so does about four-tenths of one percent in economic growth in the first quarter. Others like Aneta Markowska of Societe Generale downplay the impact. SOUNDBITE: ANETA MARKOWSKA, CHIEF U.S. ECONOMIST, SOCIETE GENERALE (ENGLISH) SAYING: "At the peak of the recession there was close to six million people on these extended benefits. Most of them have already exhausted the benefits or found work." But for the more than 4 million people who are still out of work for 27 weeks or more - every dollar lost is a dollar not spent. That will hurt retailers like grocery stores, Dollar stores, and discounters including Wal-Mart, says Morningstar's Director of Economic Analysis Robert Johnson. SOUNDBITE: ROBERT JOHNSON, DIRECTOR OF ECONOMIC ANALYSIS, MORNINGSTAR (ENGLISH) SAYING: "People used to drive to Wal-Mart to buy things, and they used to drive up to 25 miles to get there, and now maybe they will make shorter trips now they can't afford the gasoline to get to the Wal-Mart anymore. So certainly there will be those kind of knock-on effects." And that's not all - some lenders could be left holding the bag. SOUNDBITE: ROBERT JOHNSON, DIRECTOR OF ECONOMIC ANALYSIS, MORNINGSTAR (ENGLISH) SAYING: "When that money stops, it kinds of stops cold turkey. That last check comes out on December 28th, and then what had been enabling them to make that car payment or that home payment had been the unemployment benefits - if that goes away, then it might create some pain at some financial institutions as well." No matter how limited the economic impact may be, economists warn even that is too much for an economy that needs stronger demand in order to get more people back to work.

Budget leaves 1.3 million jobless out in the cold

Friday, Dec 13, 2013 - 02:16

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