At this point, it looks extremely unlikely that long-term emergency unemployment benefits will be extended.
This has caused a huge debate about whether this is wise, and what will happen to the long-term unemployed and the unemployment rate.
North Carolina has been without long-term unemployment benefits since last Summer, and so they might offer a glimpse of what happens when the unemployment insurance is not extended.
The answer? A gigantic drop in the unemployment rate.
Here’s a chart of the North Carolina unemployment rate. Look how fast its fallen lately. Basically it’s gone straight down.
Of course, the national unemployment rate has also been falling. So how much is North Caroline specific?
Here’s a look at the North Carolina unemployment minutes the national number. As you can see, the North Carolina unemployment rate is falling MUCH faster than the national number.
Of course, this only answers one question, which is what happens to the rate of unemployment.
It doesn’t tell us whether people are finding jobs or just totally dropping out of the workforce. But even if this is mostly a function of people dropping out of the labour force, the actual unemployment rate does still matter for Fed policy. So if you think this has any predictive value for the national number (which could be debated) ths number still matters.