US unemployment benefits set to end for 1.3 million jobless Americans

MORE than 1 million Americans face a bleak post-Christmas jolt as unemployment benefits are set to be cut off this weekend.

Unemployment Benefits

MORE than 1 million US citizens face a harrowing, post-Christmas jolt as extended federal unemployment benefits come to a sudden halt this weekend, with potentially significant implications for the country's recovering economy.

A tense political battle likely looms when congress reconvenes in the new, mid-term election year.

For families dependent on cash assistance, the end of the US federal government's "emergency unemployment compensation" will mean some difficult belt-tightening as enrollees lose their average monthly stipend of $US1166 ($1315).

Jobless rates could drop, but analysts say the US economy may suffer with less money for consumers to spend on everything from clothes to cars.

Having let the "emergency" program expire as part of a budget deal, it's unclear if congress has the appetite to start it anew.

An estimated 1.3 million people will be cut off when the federally funded unemployment payments end on Saturday.

About 214,000 Californians will lose their payments, a figure expected to rise to more than a half-million by June, the Labor Department said.

In the last 12 months, Californians received $US4.5 billion in federal jobless benefits, with much of it ploughed back into the local economy.

More than 127,000 New Yorkers also will be cut off.

In New Jersey, 11th among states in population, 90,000 people will immediately lose out.

Started under former US President George W. Bush, the benefits were designed as a cushion for the millions of US citizens who lost their jobs in a recession and failed to find new ones while receiving state jobless benefits, which in most states expire after six months.

Another 1.9 million people across the country are expected to exhaust their state benefits before the end of June.

Gene Sperling, the director of the White House's National Economic Council, said on Friday that US President Barack Obama wants an extension as soon as congress return next month, warning the abrupt cut-off will deliver a blow to the US economy.

"It defies economic sense, precedent and our values," Mr Sperling said.