Tags: End | Jobless | Benefits | Recession

End of Jobless Benefits Seen Boosting Recession Risks

Friday, 05 Aug 2011 08:26 AM

Debt fears and weak job demand have many predicting a double-dip recession and now there's one more figure out there supporting gloomy forecasts: the rising number of Americans no longer eligible for unemployment benefits.

Some 3.71 million Americans will lose unemployment benefits in the coming months, which means they will have less to spend in an economy that desperately needs more consumer spending, analysts say.

That puts the chances of a new recession gripping the economy at 1 in 3.

"We do not expect them to get extended," Bank of American Merrill Lynch economist Joshua Dennerlein writes in a note to clients, according to CNBC. "This will act as a hit to income, hurting consumption growth."

It won't take much to send the economy back into a recession.

"It would take a modest worsening in financial conditions, falling oil prices and rising unemployment. None of these are extreme scenarios," economist Michelle Meyer writes in a separate note.

"We argue that after a series of sucker punches earlier this year, the economy is only one shock away from falling into recession."

While many analysts had been expecting the second half of 2011 to see stronger economic activity, fears are growing that another recession looms.

Martin Feldstein, a top economic adviser to both President Ronald Reagan and President George W. Bush, tells Bloomberg that he believes the country now faces a 50 percent chance of a new recession.

"This economy is really balanced on the edge," Feldstein says.
"Nothing has given us much growth."

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Debt fears and weak job demand have many predicting a double-dip recession and now there's one more figure out there supporting gloomy forecasts: the rising number of Americans no longer eligible for unemployment benefits. Some 3.71 million Americans will lose unemployment...
End,Jobless,Benefits,Recession
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2011-26-05
Friday, 05 Aug 2011 08:26 AM
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