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The coronavirus recession has been financially devastating for many Americans. It has been a boon for others.

Many are going hungry or worried about eviction. Others are paying down debt or even buying second homes. What’s left is a confounding picture of U.S. household finances.

The current recession, like any other, has deepened the division between those who can navigate it and those who can’t. But the unusual nature of this downturn has made those differences starker.

Created with Highcharts 8.1.0Spending around start of unemployment benefits, change from a year earlierSource: JPMorgan Chase InstituteNote: Green line includes 61,307 households that received unemployment benefits in Chaseaccounts during pandemic. Both measures set to 1.0 six weeks before first payment to controlfor spending changes unrelated to pandemic.
Created with Highcharts 8.1.0WEEKS SINCE FIRST BENEFIT PAYMENTWeek -6 = 1Received benefitsstarting AprilEmployedworkers-12-10-8-6-4-20240.750.800.850.900.951.001.051.101.15Employed workersx-2x0.86

The economy collapsed this year at record speed, but the federal government rushed in with additional unemployment benefits, stimulus checks and a moratorium on evictions and foreclosures. Banks allowed customers to pause mortgage and car payments without penalty. As a result, many people who lost their jobs have stayed afloat.

‘I’m just kind of in limbo right now,’ says Kathi Edwards. A state unemployment office’s letter said the $348 a week from her remaining part-time job was above the $325 maximum to get benefits.

Photo: Kathi Edwards

And those with secure jobs, stuck at home with fewer places to spend money, came out ahead. Cutting back on commuting costs and eating out gave them more flexibility to spend on luxuries such as home improvement. Home sales had their biggest monthly gain ever in July, boosted by people looking to escape cities. There has been record demand in second-home destinations, and many are buying with cash, according to John Burns Real Estate Consulting LLC.

The stock market, predominantly owned by the wealthiest Americans, has returned to record levels. Lists of the fastest-selling cars include luxury brands such as Lexus, BMW and Tesla, according to car search engine iSeeCars.com. Sellers of boats, pools and other high-end goods are reporting blockbuster demand.

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At the same time, many laid-off workers have encountered outdated state unemployment systems that were slow to adapt to rapidly changing benefits. Some were told they were ineligible for benefits, such as some new college grads who had yet to start jobs.

Kathi Edwards of Rockford, Ill., worked two part-time jobs until she was furloughed from one in July. With her job at a nonprofit gone, she filed for state unemployment benefits but received a letter saying that the $348 a week she still made from her funeral-home job was above the $325 maximum to obtain benefits.

Created with Highcharts 8.1.0Share of households that sometimes or often go hungrySource: Diane Whitmore Schanzenbach, Northwestern UniversityNote: 2005-2018 data are on food sufficiency over past 12 months from Current PopulationSurvey-Food Security Supplement. 2020 data are on food sufficiency over previous 7 daysaveraged from the Census Household Pulse Survey.
Created with Highcharts 8.1.0%All householdsHouseholds withchildren2006'10'15'20051015

Whenever she calls the state unemployment office, she encounters an automated system and hasn’t heard back. The Illinois Department of Employment Security didn’t answer messages requesting comment.

In the meantime, Ms. Edwards has gotten by with some money she inherited from her mother, who died in June. She picked up groceries from a local church, something she never expected to do.

“I’m just kind of in limbo right now,” she said, “hoping the money holds out.”

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The ranks of the struggling are growing. The federal government’s $600 in additional weekly unemployment benefits expired in July. People have largely spent the stimulus checks they received in the spring. Lenders are bracing for more people to fall behind on debt payments. Grocery shoppers are cutting back on spending.

Almost 11% of U.S. households didn’t have enough to eat in the previous seven days, as of July. That number was about 4% in 2018, according to an analysis of federal data by Diane Whitmore Schanzenbach, an economist at Northwestern University.

About a third of renters reported little or no confidence they could make next month’s payment, Census Bureau data from July show, also an elevated level.

President Trump signed an executive order in August that would provide an extra $300 a week in federal unemployment, but the program has run into delays. Another round of stimulus checks has been discussed in Congress, but no agreement has been reached.

Jeffrey Liebman and his students at Harvard University, where he is a professor of public policy, have been interviewing 60 households in the Boston area who recently visited food pantries. A single mother who just finished community college was told she couldn’t get unemployment benefits because she wasn’t working when the pandemic hit. A grandmother received free meals at a child-care center where she volunteered—until the center shut down.

“For the folks who are economically vulnerable, things are still getting worse,” Mr. Liebman said.

Workers without permanent legal status, for example, are ineligible for unemployment. So are many waiters, baristas and other workers who have been called back to work but declined because they were afraid of getting sick.

Elizabeth Ananat, an economics professor at Barnard College, has been surveying about 1,000 Philadelphia-area service workers throughout the pandemic. Just 44% of those laid off got expanded unemployment benefits.

Malaysia Jemison, a single mother in Albany, N.Y., said she had to quit her job at a home-care agency in July because she had no one to take care of her daughter. She applied for unemployment benefits soon after but got radio silence, she said. The online portal she checked each day said, “We are continuing to work on your application.”

Malaysia Jemison, center, and her daughter encountered volunteers handing out snacks, toys and school supplies at an Albany, N.Y., park on Aug. 30.

Photo: Cindy Schultz for The Wall Street Journal

Since then, she and her daughter had to move because their home flooded. She paid for medicine and internet service with help from family members, though they are hurting, too. She relied on food stamps even when she was working, but now they are her main lifeline.

“We are waiting and hoping and praying a miracle happens,” she said last week.

After The Wall Street Journal contacted New York state’s labor department, a representative called Ms. Jemison and said her benefits would be released. A spokeswoman said some claims can take longer “where further documentation or adjudication is needed.”

‘I have paid off credit cards; my credit score has gone up,’ says musician Larry McKenzie.

Photo: Larry McKenzie

Many of those who got expanded unemployment have been able to stave off the effects of the recession—at least for now.

A majority of workers who lost their jobs but got the extra $600 a week earned more in unemployment for several months than they did at their jobs. They used the cash to pay down debt, add to savings accounts and spend.

Larry McKenzie, a musician who plays under the stage name Wyatt Hurts, struggled when bars and restaurants closed early in the pandemic.

Mr. McKenzie said he filed for unemployment with the state of Florida and heard nothing for weeks. But when it did kick in around the beginning of summer, he was brought current with a lump sum of more than $5,000. He also got a forgivable loan through the Paycheck Protection Program and a $1,200 stimulus check. All of a sudden, he was netting more income than usual, considering expenses he no longer had to pay.

“I have paid off credit cards; my credit score has gone up. I’m actually paying my bills a month ahead now,” he said. He has since gone on and off unemployment as performance gigs have come up. He hasn’t been working since he got sick with Covid-19 recently, he said.

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Write to Ben Eisen at ben.eisen@wsj.com

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