by Calculated Risk on 1/08/2014 09:00:00 PM

From Jeffry Bartash at MarketWatch: What happens when jobless benefits are cut? North Carolina may offer clues

Last summer, North Carolina slashed the amount of cash it gave to people after they lost their jobs and the state also reduced the number of weeks they could receive benefits. Within several months, the unemployment rate fell a few ticks and by November it fell to a five-year low.
...
Government data also shows that more than 22,000 North Carolinians found work since the cutoff and the number of unemployed sank by nearly 73,000 to 344,000.

What the data doesn’t tell us, however, is what happened to all the people no longer classified as unemployed. While some found a job, others may have retired, ended up on welfare, moved in with family members, sought disability payments or fled to a nearby state with better benefits. We just don’t know.

If Congress fails to take action, I expect the national unemployment rate to fall as many people leave the labor force (the wrong reason for a decline in the unemployment rate). Hopefully Congress will extend the benefits as has happened every time before when this many people are suffering from long term unemployment (it is good policy and good economics) ...

Thursday:
• Early: Trulia Price Rent Monitors for December. This is the index from Trulia that uses asking house prices adjusted both for the mix of homes listed for sale and for seasonal factors.

• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to decline to 331 thousand from 339 thousand.