By Karen Axelton
The holiday shopping season has gotten off to a promising start for retailers—but that spending could grind to a halt if Congress doesn’t pass an extension of unemployment benefits. The Los Angeles Times recently took a look at the issue. With consumer spending still accounting for 70 percent of the U.S. economy, the loss of benefits for 2 million jobless Americans would have a huge impact.
In past recessions, jobless benefits were regularly extended—in the recession of the early 1980s, for example, unemployment benefits went on for 28 months after the recession officially ended. The current recession ended 17 months ago, and the unemployment rate is still close to 10 percent. Recently a group of 33 economists, including five Nobel prize winners, signed a statement urging congressional leaders to extend unemployment benefits.
What’s the problem? Partisan infighting. Some Republicans don’t believe unemployed people should receive benefits. Others aren’t opposed to benefits, but don’t want to continue them unless government spending is cut by the same amount. As of Tuesday, Democrats’ attempt to hold a fast-track vote to extend benefits was shot down as Congress continued to argue over Bush-era tax cuts and the deficit.
Will decisions happen in time to boost year-end shopping? Retailers had better hope so, or they may find a lot less green under their holiday tree.
Photo courtesy: Karen Axelton