Unemployment benefits will run out earlier than expected for hundreds of thousands of out-of-work Americans, The New York Times reports.

Congress extended federal unemployment benefits in February, but with the extension, the period of eligibility was cut for several months depending on the state.

The result, many will stop receiving benefits quicker than they assumed.
Critics say reduced unemployment extensions will hurt the economy.

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"It’s moving in the wrong direction, and it’s occurring at a time when unemployment is very high," says Chad Stone, the chief economist at the liberal Center on Budget and Policy Priorities, the Times reports.

Previous unemployment benefits supplemented by the government ran for 99 weeks, a period critics say is too long to be extended at full.

"I haven’t liked the 99-week solution from the beginning because it creates an environment where people are subsidized to become a structural unemployment problem," says Kevin A. Hassett, director of economic policy studies at the conservative American Enterprise Institute.

More may see their unemployment benefits dry up as the year ends, when tax breaks and unemployment benefits end and automatic spending cuts kick in.

Some warn such a combination will siphon billions of dollars out of the economy and offset any growth the economy may experience in 2013, a scenario often referred to as a "fiscal cliff."

The Congressional Budget Office (CBO) has said that failure on the part of the White House and Congress to adjust the timing of spending cuts and tax breaks today could throw the country into a recession next year, with gross domestic product shrinking 1.3 percent in the first half.

"Given the pattern of past recessions ... such a contraction in output in the first half of 2013 would probably be judged to be a recession," the CBO says in a report, according to Reuters.

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