US | Pandemic unemployment benefits ending for millions

More than 11 million individuals will lose access to emergency unemployment benefits at the end of next week creating a headwind for personal income and consumer spending.

This comes as 25 states had already terminated benefits for roughly 3.5 million individuals ahead of the original American Rescue Plan deadline of Sep 6.

While states implementing an early termination argued that benefits were impeding labor supply, we only find a marginal effect. Other research confirms the limited impact of benefits on employment, but with wide uncertainty bands.

As such, it appears the expiry of benefits will weigh more on the personal income ledger of the economy than it does to support employment growth.