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Stimulus From Jobless Aid Fades as U.S. Hiring Grows

Bloomberg (01/09/13) Joshua Zumbrun

Congress recently extended emergency jobless benefits, which enable states hit hard by unemployment to offer payments for as long as 73 weeks. Government estimates indicate that long-term unemployment benefits to be paid out this year will total $30 billion, marking a decline from $45.5 billion last year. Mark Zandi, chief economist at Moody’s Analytics, says it is one of the most effective stimulus programs, given that every $1 in benefits that is paid out generates 1.55 times as much economic activity. JPMorgan Chase & Co. economists estimate that economic growth would have fallen by nearly 0.2 percentage point this year if Congress allowed the benefits to expire. The number of Americans collecting extended and emergency benefits decreased from 3.56 million during the last week of 2011 to 2.07 million during the week ended Dec. 15, 2012, due in part to the fact that unemployed workers in states with declining jobless rates no longer qualify for the benefits.