Saturday, December 28, 2013

While the US stock markets continue marching ever higher ( for now ) , 1.3 million unemployed Americans are being left desperate as long-term unemployment benefits expire .....

http://rt.com/usa/americans-desperate-unemployment-benefits-expire-880/



Out-of-job Americans left desperate as long-term unemployment benefits expire

Published time: December 27, 2013 18:29
A job seeker yawns as he waits in front of the training offices of Local Union 46, a union representing metallic lathers and reinforcing ironworkers, in the Queens borough of New York (Reuters/Keith Bedford)
A job seeker yawns as he waits in front of the training offices of Local Union 46, a union representing metallic lathers and reinforcing ironworkers, in the Queens borough of New York (Reuters/Keith Bedford)
While US lawmakers spar over extending unemployment benefits, out-of-work Americans could wake up on December 28 to find themselves unable to afford life’s basic necessities.
Barring last-minute action by Congress, the long-term unemployment insurance program will expire on Saturday, leaving 1.3 million Americans to fend for themselves as they continue to look for jobs in an economy that’s still recovering.
For many unemployed individuals, these benefits are the only safety net they have, and they’re the only things keeping them from sliding into poverty.
One Michigan woman in danger of losing her benefits, Linda Sandefur, told NPR that without her unemployment check, she would be unable to pay the mortgage on her house, which she shares with her mother.
"I have a master's degree and bachelor's degree, 20 years of work experience," she said. "This is like my third go-around on unemployment. And for me, the American dream is dead."
Sandefur isn’t the only one using benefits to keep a roof over her head, however, as many unemployed Americans rely on their weekly paychecks to stay sheltered, pay medical bills, and put food on the table.
"Even though it's a struggle to buy food and everything, it means that I am keeping the lights on and I'm keeping food in the house, sometimes just barely but I'm able to do that," Ellen Andrews, a New Yorker and mother of one, said to ABC News. "It's keeping me afloat until I can get to that next job."
Meanwhile, limited job training and career-changing opportunities have others wondering what options actually exist for those who’ve been out of the job market for so long. Massillon, Ohio man Mike Lutz already lost his home once in a foreclosure back in 2010, and now he’s on his second round of unemployment assistance. He’s pessimistic about the future for those who don’t already have skills that are in demand.
"What choices are you giving people because there's not really work out there to have. ... If they cut (benefits) off the way they're talking about, I don't see a lot of opportunities for the labor force,” he said to local CantonRep.com. “Maybe if you're college-educated and you got good computer skills or accounting skills, it might not affect you so bad. But for someone who builds houses, builds roads, those jobs aren't really out there."
But while the fate of the unemployment assistance program hangs in the air, the impact of expiring benefits could have serious consequences for the lives of Americans and the U.S. economy.
According to President Barack Obama’s Council of Economic Advisors and the Labor Department, failure to extend benefits towards those unemployed longer than 26 weeks could cost the U.S. economy about 240,000 jobs. A report drafted by the council noted that Congress has never allowed benefits to expire with the unemployment rate where it is today, at 7.3 percent.
Meanwhile, a report by the Washington Post stated that 4 million people – college graduates, married individuals with families, the elderly, and more – have remained jobless for 27 weeks or more. That number is lower than it was at the peak of the Great Recession, but it’s still the highest level it’s been at since World War II.
Additionally, the Center on Budget and Policy Priorities expects nearly five million people to see their benefits disappear entirely before they can find a job over the next year.
Many Republicans have balked at authorizing another extension for the program. Some believe it depresses job creation by reducing the incentive to find work. With some states offering up to 73 weeks of unemployment aid, other Republicans believe it’s time to bring the program back down to its traditional size.
In the Senate, Majority Leader Harry Reid (D-Nev.) has scheduled a procedural vote on a three-month extension in early January, but it’s unclear whether he can garner enough support to pass the measure, or whether the Republican-controlled House of Representatives would approve the extension should it make its way to the chamber.
Until then, however, unemployed Americans are hoping to get by just long enough to have a decent chance to find a good job, and to create a decent life for themselves and their families.


And recall from before how this came to be........


http://www.zerohedge.com/news/2013-12-10/bipartisan-budget-deal-reached-avoiding-january-15-government-shutdown



Bipartisan Budget Deal Reached; No Extension Of Unemployment Benefits Means Unemployment Rate Set To... Plunge

Tyler Durden's picture






Moments ago, news hit that democrat negotiators Patty Murray, and republican Paul Ryan reached a bipartisan deal to ease the automatic budget cuts by $60b. The deal calls for auctioning of govt airwaves, increased premiums for pensions backed by PBGC, a congressional aide told Bloomberg’s Heidi Przybyla. A press conference will be held at 6pm to unveil the bipartisan budget agreement, according to e-mailed statement. As a result, a January 15 government shutdown will be avoided.
More from the AP, via NBC:
Congressional negotiators reached a modest budget agreement Tuesday to restore about $65 billion in automatic spending cuts from programs ranging from parks to the Pentagon, with votes expected in both houses by week's end.

Officials said the increases would be offset by a variety of spending reductions and increased fees elsewhere in the budget totaling about $85 billion over a decade, enough for a largely symbolic cut of roughly $20 billion in the nation's $17 trillion debt.

Among them is a requirement for federal workers to make larger contributions to their own pensions, as well as an increase in a federal security fee that would add $5 to the cost of a typical roundtrip flight.

Officials said Democrats had failed in their bid to include an extension of benefits for workers unemployed longer than 26 weeks. The program expires on Dec. 28, when payments will be cut off for an estimated 1.3 million individuals.

Announcement of the deal came in the form of a statement that the two negotiators, Sen. Patty Murray, D-Wash., and Rep. Paul Ryan, R-Wis., who planned a news conference to announce details. The lawmakers chair the budget committees in the two houses of Congress, and negotiated the deal in secretive talks over recent weeks.

Officials said that under the agreement, an estimated $65 billion in automatic spending cuts would be restored through the end of the next budget year, which runs to Sept. 30, 2015.

Officials who described the details in advance of the news conference did so on the condition of anonymity, saying they were not authorized to speak on the record.

The same was not true of conservative organizations, which attacked the proposal as a betrayal of a hard-won 2011 agreement that reduced government spending and is counted as among the main accomplishments of tea party-aligned Republicans who came to power earlier the same year in the House.

Americans for Prosperity issued a midmorning statement saying that GOP lawmakers should uphold current spending levels. Otherwise, the group said, "congressional Republicans are joining liberal Democrats in breaking their word to the American people to finally begin reining in government overspending that has left us over $17 trillion in debt."

A day earlier, Heritage Action issued a similar broadside, saying it could not support a deal that "would increase spending in the near-term for promises of woefully inadequate long-term reductions." The group played an influential behind-the-scenes role earlier this fall in events that led to a partial government shutdown, supporting a strategy of refusing to provide needed funds for federal programs until the health care law known as "Obamacare" was defunded.

For their part, liberals were unhappy that the deal was likely to lack an extension of benefits for unemployed workers more than 26 weeks off the job.

The party's leader, Rep. Nancy Pelosi of California, said at one point last week that her rank and file would insist on an extension for the unemployment program as a condition for supporting a budget deal.

The White House pointedly refused to support her position, and she later made additional comments that her staff characterized as a clarification.

Given the internal GOP divisions in the House, Speaker John Boehner is likely to need Democratic votes to approve any deal by Ryan and Murray. It was not immediately clear how many Democratic lawmakers would support a plan that lacked an extension of unemployment benefits.

Some Democratic officials suggested a possible two-step solution. It included swift passage of any budget agreement that emerges, and then adding an extension of unemployment benefits to must-pass legislation early next year, perhaps a measure to reverse a looming cut in payments to doctors who treat Medicare patients.

The bipartisan push for a budget agreement stems from automatic cuts that are themselves the consequence of divided government's ability to complete a sweeping deficit reduction package in 2011.

If left in place, the reductions would carve $91 billion from the day-to-day budgets of the Pentagon and domestic agencies when compared with spending limits set by the hard-fought 2011 budget agreement.

Support for a deal to ease the reductions is strongest in Congress among defense hawks in both houses and both parties who fear the impact on military readiness from a looming $20 billion cut in Pentagon spending.

The White House wants a deal for a same reason, but also to ease the impact of automatic cuts on domestic programs from education to transportation to the national parks.
Since there was a failure to obtain an extension of benefits for workers unemployed longer than 26 weeks, it likely means that, as explained before, the labor force is about to collapse by up to 1.3 million, paradoxically leading to an even faster drop in the unemployment rate.Recall:
If the Congress does not pass the bill to extend emergency aid - set to expire Dec 28th - then up to 1.3 million more people will be added to that list of 91.5 million already our of the labor force(and another 800,000 more to come in further months)...

This has profound implications for the oh-so-important unemployment rate that  the Fed is so dependent upon...

JPM's Feroli: One observation that could set an upper bound on thinking about a participation effect is to hypothesize that all 1.3 million EUC claimants exit the labor force after benefits expire in 1Q (again, should Congress allow that to happen). In that case, the unemployment rate would fall by 0.8%-pt, obviously an extreme example. Some of the Fed studies can help to narrow the range of outcomes.

One of the more recent works (Farber and Valletta from the San Francisco Fed) indicates that about a fifth of long-term unemployment is due to extended benefits. With just over 4 million long-term unemployed recently, this would imply that the absence of extended UI benefits could lower the unemployment rate by 0.5%-pt.

This will directly impact the Fed's credibility to manage the economt in a "data-dependent" manner:

JPM's Feroli: Setting aside the normative aspect of whether from a public policy perspective this is a desirable or undesirable outcome, such a fall in the unemployment and participation rates could create some tricky choices for Fed policymakers as they assess the health of the labor market.

Remember, while consensus is convinced Taper is a positive (the Fed wouldn't pull back unless everything is golden); we suspect, and today's Treasury Auction Failure supports that thesis, that the Fed is looking for excuses to Taper (or shift policy away from QE)...
Finally, as a result of the implicit $5 billion a month fiscal boost, a near-term modest taper is now even more likely.



and.........



http://www.zerohedge.com/news/2013-12-02/are-another-13-million-americans-about-drop-out-labor-force-and-send-unemployment-pl



Are Another 1.3 Million Americans About To Drop Out Of Labor Force (And Send Unemployment Plunging)?

Tyler Durden's picture






With even the Fed somewhat challenging the credibility of the official unemployment rate - as labor force participation collapses structurally - the possibility that if Congress does not act by Dec 28th, a further 1.3 million people will lose emergency aid and may be deemed 'out' of the labor force merely exaggerates an already farcical situation. As JPM's Mike Feroli notes, the "official"unemployment rate may drop up to 0.8 percentage points, but it won't mean the economy is any better. Is this the 'excuse' the Fed needs to transition from QE to forward guidance (with the public seeing only a rapidly collapsing unemployment rate as evidence of their success) even as the data that they are so "dependent" on becomes worse than useless?

As we warned in November, the only two charts that matter ahead of Friday's likely distorted nonfarm payrolls report.
First, the labor force participation rate, which plunged from 63.2% to 62.8% - the lowest since 1978!

But more importantly, the number of people not in the labor force exploded by nearly 1 million, or 932,000 to be exact, in just the month of October, to a record 91.5 million Americans! This was the third highest monthly increase in people falling out of the labor force in US history.
At this pace the people out of the labor force will surpass the working Americans in about 4 years.

And if the Congress does not pass the bill to extend emergency aid - set to expire Dec 28th - then up to 1.3 million more people will be added to that list of 91.5 million already our of the labor force (and another 800,000 more to come in further months)...
This has profound implications for the oh-so-important unemployment rate that  the Fed is so dependent upon...
JPM's Feroli: One observation that could set an upper bound on thinking about a participation effect is to hypothesize that all 1.3 million EUC claimants exit the labor force after benefits expire in 1Q (again, should Congress allow that to happen). In that case, the unemployment rate would fall by 0.8%-pt, obviously an extreme example. Some of the Fed studies can help to narrow the range of outcomes.

One of the more recent works (Farber and Valletta from the San Francisco Fed) indicates that about a fifth of long-term unemployment is due to extended benefits. With just over 4 million long-term unemployed recently, this would imply that the absence of extended UI benefits could lower the unemployment rate by 0.5%-pt.
This will directly impact the Fed's credibility to manage the economt in a "data-dependent" manner:
JPM's Feroli: Setting aside the normative aspect of whether from a public policy perspective this is a desirable or undesirable outcome, such a fall in the unemployment and participation rates could create some tricky choices for Fed policymakers as they assess the health of the labor market.
Remember, while consensus is convinced Taper is a positive (the Fed wouldn't pull back unless everything is golden); we suspect, and today's Treasury Auction Failure supports that thesis, that the Fed is looking for excuses to Taper (or shift policy away from QE)...
As we have noted numerous times before; the "taper" is all about economic cover for a forced move the Fed has to make:
1. Deficits are shrinking and the Fed has less and less room for its buying

2. Under the surface, various non-mainstream technicalities are breaking in the markets due to the size of the Fed's position (repo markets, bond specialness, and fail-to-delivers among them).

3. Sentiment is critical; if the public starts to believe (as Kyle Bass warned) that the central bank is monetizing the government's debt (which it clearly is), then the game accelerates away from them very quickly - and we suspect they fear we are close to that tipping point

4. The rest of the world is not happy. As Canada just noted, the US monetary policy will be discussed at the G-20
Simply put, they are cornered and need to Taper; no matter how bad the macro data and we are sure 'trends' and longer-term horizons will come to their rescue in defending the prime dealers' clear agreement that it is time...