The new year could kick off with some good news that isn’t really good news — a sharp drop in the unemployment rate that might hurt the economy more than it helps.
The drop would occur if Congress chooses not to renew extended unemployment benefits at the end of the year, which would cost taxpayers about $19 billion in 2014. Given the ongoing scarcity of jobs — especially ones that pay well — those benefits are a lifeline for a lot of people who have been unemployed more than a few months. But the pressure is on in Washington to rein in spending and wind down stimulus measures that date back to 2009. So federal unemployment benefits look endangered.
If those benefits end, it could mean a big change to the numbers that determine the unemployment rate, which is nothing more than the number of people who don’t have jobs and are looking for work, as a percentage of the total labor force. The latest numbers, for instance, show there are 11,272,000 unemployed people, out of a total labor forceRead More »from Why a Drop in the Unemployment Rate Could Be Bad News