WASHINGTON (AP) — 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 concern that 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 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, S.C. “I’ll be broke-broke. I want to go to work, I want health insurance, I want a 401(k). I want a life; I have no life right now.”
Without the extra unemployment benefits, Bennett will receive just $200 a week.
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 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 spurred fear that the economy will shed jobs again in July, after two sharp hiring gains in May and 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.
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 White House 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 probably 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 presented a $1 trillion package that would replace the $600 with an amount that would bring a laid-off worker’s jobless benefits to 70 percent 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 that 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 157 new deaths, raising its toll to 8,027. An additional 89 deaths in Arizona pushed its total to 3,000, with more than 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 is likely to recover relatively quickly because of the Communist Party’s move to impose early and intensive anti-disease measures.