Although prior research has assessed public mental health in the U.S. throughout the COVID-19 pandemic, it is unclear how area-level unemployment impacted psychological well-being; moreover, studies that examine potential effect heterogeneity of the impact of area-level unemployment on well-being by employment status are lacking. To address these shortcomings, this study utilized data from Gallup's repeated cross-sectional, nationally representative COVID-19 web survey collected between April 2020 and July 2021 (n = 132,971). Survey modified Poisson regression models were estimated to determine the association between current unemployment rate in respondents' state of residence and experience of each of the following negative emotions during a lot of the prior day: sadness, worry, stress, anger, loneliness, depression, and anxiety. These models were stratified by employment status and sequentially adjusted for individual-level covariates, state fixed effects and current state-level COVID-19 mortality. State-level unemployment was most strongly associated with sadness, followed by worry, anger, loneliness, stress, and anxiety; no associations were observed for depression. For sadness, worry, and stress, associations were strongest among full-time employed and retired individuals, and weakest among unemployed respondents and homemakers. Moreover, there was some evidence that state-level unemployment was negatively associated with the experience of anger in the early stages of the pandemic, and positively in its later stages. In sum, these findings suggest that Americans' emotional experience during the COVID-19 pandemic was considerably impacted by the state of the economy, highlighting the need for risk-buffering social policies.