President Obama warned Friday that failing to extend unemployment insurance benefits before the end of the year would drag on the U.S. economy.

 "You’ve got potentially 1.3 million people during Christmas time that are going to lose their unemployment benefits at a time when it’s still very difficult for a lot of folks to find a job," Obama said at an economic forum at the White House with mayors from across the nation.

"That’s not just bad for those individuals and those families, that’s bad for our economy and that’s bad for our cities, because if they don’t have the money to pay the rent and buy food for their families, that has an impact on demand for our businesses, and what we know is a failure to extend unemployment benefits is going to have a drag on economic growth next year,” he added.

Leaders in the House and Senate have signaled that they won't address the unemployment issue before leaving for winter recess. 

Momentum for extending the unemployment benefits seemed to stall after House Democrats and the White House said they wouldn't insist on it as part of the bipartisan budget agreement.

On Friday, Democrats signaled they may attempt to tie the extension to the farm bill once they return from the winter break.

White House officials have said they want lawmakers to address the issue as quickly as possible when they return. They note the emergency benefits program was implemented during George W. Bush's presidency, when unemployment reached 5.6 percent — still substantially lower than the 7 percent rate today.

"If Congress does not act in time before those benefits expire, we would absolutely expect them to act as soon as possible upon their return," White House press secretary Jay Carney said on Thursday.

At the event, which included Vice President Biden, senior adviser Valerie Jarrett and 16 mayors and mayors-elect, including New York's Bill de Blasio and Los Angeles's Eric Garcetti, Obama said he hoped to create a "strong partnership" to help spur job growth.

"What we know is we still have a lot of work to do to deliver a vision we share, which is an America where if you work hard, you can make it," Obama said.