The nation got another dose of bad economic news Thursday as the number of laid-off workers seeking jobless benefits rose for the first time since late March, intensifying concerns the resurgent coronavirus is stalling or even reversing the economic recovery.
And an extra $600 in weekly unemployment benefits, provided by the federal government on top of whatever assistance states provide, is set to expire July 31, though this is the last week recipients will get the extra funds. It is the last major source of economic help from the $2 trillion relief package that Congress approved in March. A small business lending program and a one-time $1,200 payment have largely run their course.
With the count of U.S. infections passing 4 million and the aid ending, nearly 30 million unemployed people could struggle to pay rent, utilities, or other bills, and economists worry that overall consumer spending will drop, adding another economic blow.
“I’m going to be broke,” said Melissa Bennett, who was laid off from her job at a vacation time-share in Myrtle Beach, South Carolina. “I’ll be broke-broke. I want to go to work, I want health insurance, I want a 401K. I want a life; I have no life right now.”
Without the extra unemployment benefits, Bennett will receive just $200 a week, and she’ll have to decide whether to pay her mortgage or her utilities first.
More than 1.4 million people applied for jobless benefits last week, the Labor Department said Thursday, up from 1.3 million the previous week. That is the first increase since March and the 18th straight week that it has topped 1 million. Before the pandemic, applications had never exceeded 700,000. An additional 975,000 people applied for aid under a separate program that has made self-employed and gig workers eligible for the first time.
The news sent stocks slumping on Wall Street, with the S&P 500 recording its worst loss in nearly four weeks. Uncertainty across markets helped gold touch its highest price in nearly nine years.
The weakening of the labor market has raised fears the economy will shed jobs again in July, after two sharp hiring gains in May and June.
Analysts say the economy can’t improve until authorities can control the spread of the virus, a need that is complicating the reopening of businesses and schools.
Adm. Brett Giroir, assistant secretary of health and a member of the Trump administration’s coronavirus task force, even suggested another shutdown might be necessary. He noted that nearly universal mask-wearing, sharp restrictions on restaurant occupancy, and shutting down bars were nearly as effective in controlling the virus as another shutdown of all nonessential businesses.
“Now, if you don’t do that, and people don’t achieve those goals, particularly mask-wearing, there may be no alternative,” Giroir said on MSNBC.
Congress is negotiating another aid package that could extend the extra unemployment support, though likely at less than $600. With the extra $600, roughly two-thirds of the unemployed are receiving more than they earned at their former jobs, research has shown. Republicans argue that it’s discouraging people from returning to work.
On Thursday, Senate Republicans unveiled a $1 trillion package that would replace the $600 with an amount that would bring a laid-off worker’s jobless benefits to 70% of their previous income. Both parties have agreed on another $1,200 stimulus check.
Democrats in the House approved a $3 trillion package last month that would extend the $600 through January. Given the limited time available, Treasury Secretary Steven Mnuchin urged a bill dealing with jobless benefits and aid to schools be considered next week. Democrats say the Republican plans are not enough.
The economic woes come as outbreaks worsen, particularly in the South and West. Florida officials reported 173 new virus deaths Thursday, a daily high that brings the overall number to more than 5,500. With cases surging, President Donald Trump scrapped plans for a Republican National Convention celebration in the state.
California saw a record of 157 new deaths, raising its toll to 8,027. An additional 89 deaths in Arizona pushed its total to 3,000, with over 1,000 deaths reported in the past 15 days.
Desperate to stop the spread of the virus and its resulting economic impact, more states are adding or broadening mask requirements. A new survey from The Associated Press-NORC Center for Public Affairs Research says three out of four Americans, including a majority of Republicans, favor requiring people to wear face coverings outside their homes.
In a small step toward normalcy, many Americans eagerly welcomed baseball’s opening day, which arrived four months late.
In contrast to the U.S., the outlook has brightened for some other major economies. Europe is forecast to rebound next year after it managed to shrink its coronavirus caseload. Unemployment in the 19 countries that use the euro has remained contained, reflecting aggressive government efforts to keep workers on payrolls.
China has become the first major economy to grow since the start of the pandemic. Economists say China will likely recover relatively fast because of the Communist Party’s move to impose early and intensive anti-disease measures.
In the U.S., applications for unemployment benefits declined in many states hard hit by the virus, including Texas, Florida, Georgia, and Arizona. But claims rose in other states seeing increases, including Louisiana, California, and Tennessee.
The U.S. government said the total number of people receiving jobless benefits fell 1.1 million, to 16.2 million. It’s a hopeful sign that even as layoffs remain high, some companies are recalling workers. Yet that figure is still roughly 10 times what it was before the pandemic.
Unemployment aid accounted for 6% of all U.S. income in May, a greater share than even Social Security. Economists say it’s one reason why retail spending rebounded as quickly as it did in May and June.
The end of the added benefit coincides with the expiration of a federal moratorium on evictions Saturday. Without it, about 22 million people are at risk of losing their federally subsidized housing.
“It’s scary, it’s really scary,” said Victorita Raaen, 46, who was laid off in March from her job as a light and sound technician in Boise, Idaho.
The extra payments helped her build a thin financial cushion, but once it goes away, things will get significantly tighter. She figures she can live on ramen, hot dogs, and peanut butter and jelly sandwiches for a while but might not be able to pay for gas.
“I want to go back to work,” she said. “I’d rather go back than sitting here earning unemployment.”
Real-time measures of the economy suggest companies are pulling back on hiring and more small businesses are closing permanently. Credit card spending has been stuck at about 10% below year-ago levels for nearly a month, according to JPMorgan Chase, after having risen steadily from mid-April to mid-June.
Data from the consumer-review website Yelp, which tracks millions of small businesses, show more such companies are permanently shutting down. Nearly 73,000 small businesses have closed for good since the pandemic intensified in March, up 28% from mid-June.
“Every time a business closes, that makes the recovery longer and harder, so that worries me,” said Ernie Tedeschi, an economist at the investment bank Evercore ISI.
The coronavirus outbreaks in big states like California, Texas, and Florida—the nation's three most populated states—are already starting to pull the economic recovery backward.
On Thursday we learned 1.4 million Americans filed initial unemployment claims in the week ending July 18. That's up from 1.3 million the week prior, marking the first time in four months that new unemployment claims have increased.
This also marks 18 straight weeks that initial unemployment claims have topped 1 million—something that had never occurred before March 2020. The old record of 695,000 claims from the week of October 2 1982 had stood for almost four decades.

The uptick in unemployment claims overcomes after claims had fallen every week since the peak of 6.9 million, for the week ending March 28. It also could be the manifestation of what some economists have been predicting: that soaring COVID-19 cases in the South, West, and Midwest could pull the economy back into recession or contraction.
"The virus is doing significant economic damage. States [with increasing cases] are reversing and pausing. Consumers and businesses there are more cautious and not spending as much," says Mark Zandi, Moody's Analytics Chief Economist.
That is reflected in the U.S. Department of Labor's claims data. Florida, which reported a record-high 173 new deaths from COVID-19 on Thursday, also led the nation in the week ending July 11 with 65,890 new unemployment claims. It was followed by Georgia (+33,292) and California (+20,123). Those states are also among the places where COVID-19 cases are swinging upwards.
But this uptick pales in comparison to what the economy experienced in March when it went from 282,000 weekly claims to 6.9 million in just a two week period. And there is the reason for optimism: The total number of Americans receiving unemployment benefits fell from 17.3 million to 16.2 million. However, that figure runs one week behind new claims data, and very likely could go up again next week.

Nevada still has the highest number of workers collecting unemployment benefits at 21.3%. It is followed by Hawaii (20.7%) and Georgia (18%).