Markets Lose Steam as Coronavirus Continues to Rage: Live Updates

The government reported on Thursday that 723,000 workers filed new claims for state unemployment benefits last week as the coronavirus pandemic continued to inflict economic damage.

Another 298,000 new claims were filed under a federal emergency program, Pandemic Unemployment Assistance, designed for freelancers, part-time workers and others who are not normally eligible for state benefits. Neither figure is seasonally adjusted.

On a seasonally adjusted basis, the figure for new state claims was 709,000.

New claims declined to a new low from the stratospheric multimillion levels reached in the spring — but they continue to outrun records set in previous recessions.

“The gradual healing of the labor market continued, but the magnitude is still high,” said Diane Swonk, chief economist at the accounting firm Grant Thornton.

“Technically it looks like we’re in a recovery,” she said, “but we’re still so much in the hole.”

Prospects for digging out of that hole are shadowed by the alarming rise in coronavirus caseloads around the country.

And many people already collecting unemployment insurance have been hitting the 26-week limit on benefits that exists in most states.

Those workers are eligible to receive an additional 13 weeks of benefits under a federal program called Pandemic Emergency Unemployment Compensation, though the transfer from one program to the other is not automatic in some states. That caseload has been rising.

Most economists agree that controlling the pandemic is a prerequisite for an economic recovery regardless of any government-ordered shutdowns.

News of the development of a vaccine that is 90 percent effective lifted hopes — and markets — this week. But Mary C. Daly, president of the Federal Reserve Bank of San Francisco, said on Tuesday, “The economy right now is being dictated by coronavirus’s existence, and I think less by the potential for a vaccine.”

Several Fed officials, including the chair, Jerome H. Powell, have said Congress’s failure to agree on another relief package for individuals and business will hamper any recovery. Both federal pandemic-related jobless programs will expire at the end of the year without further action.

With the coronavirus pandemic entering its ninth month, economists warn that the prolonged downturn could inflict long-lasting wounds to the U.S. employment outlook.

“There’s a risk that we’re going to see permanent damage to the labor market,” said Rubeela Farooqi, chief U.S. economist for High Frequency Economics, referring to laid-off workers who end up dropping out of the work force and to industries like restaurants, entertainment, travel and hospitality that are unable to return to full capacity.

Roughly one-third of unemployed workers have been without a…