End of Extended Unemployment Could Cause Jobless Rate to Tumble
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The end of extended jobless benefits for more than 1 million Americans last week could cause the unemployment rate to tumble dramatically early this year, according to some Wall Street analysts.
Nearly 1.4 million people received payments through the financial-crisis era program as of Dec. 14, 2013, the Labor Department said Thursday. Those benefits expired last week. If a large portion of the recipients now drop out of the labor force, the unemployment rate would fall.
TD Securities estimates the decline in the jobless rate could be as much as a half-percentage point. Other analysts suggest the fall could be a smaller, but still significant, quarter-point drop.
The unemployment rate is the share of the total labor force that is out of work but actively seeking employment. To receive jobless benefits recipients need to keep applying for jobs. But once the government deposits stop flowing, they may be less motivated to look for work and thus drop out of the labor force.