After a decade of low growth and inflation, Federal Reserve Chairman Jerome Powell unveiled a new strategy a year ago in which the central bank would keep interest rates lower for longer.

Reality has dealt Mr. Powell a different and unexpected challenge: the biggest inflation spike in decades. Consumer prices rose 5.4% in July from a year earlier.

Mr. Powell heads into the Kansas City Fed’s annual conference this week at the center of the debate over how long the currently higher inflation will last, and what the Fed should do about it.

He is managing internal disagreement and weathering external criticism, with economic recovery thrown into renewed turmoil by the rise of the Delta variant.

Some central bank officials expect the recent price surges to reverse on their own, allowing the Fed to stick to the approach Mr. Powell outlined a year ago, intended to generate inflation slightly above 2%. Others see dangers that high inflation will...

The U.S. Treasury Department has given humanitarian organizations a green light to provide aid to Afghanistan, easing concerns that antiterrorism sanctions on the Taliban could prevent the country from getting the food and other supplies it needs to stem a growing economic crisis, according to people familiar with the matter.

Treasury’s nod, which came in private conversations this week, is a response to pressure from aid groups and banks eager for assurance they won’t be punished for undertaking humanitarian relief or handling the associated financial transactions. It is unclear whether the informal guidance has fully addressed their concerns, as prominent coalitions of aid groups have asked the Treasury Department to issue formal waivers.

Following the terrorist attacks of Sept. 11, 2001, the U.S. designated the Taliban a terrorist group for its role harboring the al Qaeda militants who planned and executed the operation. U.S. law since then has prohibited...

Federal Reserve Bank of Kansas City leader Esther George said the time to cut back on central bank bond-buying stimulus is looming into view.

When it comes to paring back what is now a $120 billion a month in bond buying, “we’re going to continue to see job gains, continue to see strong growth,” Ms. George told Fox Business Network on Thursday. This “suggests that we can begin to make some of those adjustments this year,” and it is important the process happens “sooner rather than later.”

Ms....

Jobless claims likely held near a pandemic low last week, a sign the job-market recovery remains on sound footing despite uncertainty surrounding the Delta variant of Covid-19.

Economists surveyed by The Wall Street Journal estimate that the Labor Department will report that unemployment claims were 350,000 last week, nearly the same as 348,000 a week earlier, the lowest level for claims since March 2020.

Applications for unemployment benefits are down more than 50% since the start of the year. They have continued to fall this summer, despite a surge in the Delta variant that has resulted in rising Covid-19 cases and hospitalizations throughout the country.

“Even with the spread of the Delta variant, many people who are vaccinated feel more comfortable doing things than they did previously,” said Gus Faucher, chief economist at PNC Financial Services Group Inc. “Demand for labor remains very strong.”

Continuing claims for regular state programs,...

Spending at U.S. retailers fell sharply in July, amid cooling purchases of goods and signs of some pullback in consumer demand as U.S. Covid-19 cases tied to the Delta variant rose.

Retail sales—a measure of purchases at stores, at restaurants and online—fell 1.1% last month compared with June, the Commerce Department reported Tuesday. Excluding autos—a category where supply-chain issues have limited available inventory—sales declined 0.4%.

Tuesday’s report suggested Americans continued to shift spending toward services in July. Sales dropped across several categories, primarily autos—which was down 3.9%—but also clothing, sporting goods and furniture. The retail-sales figures capture spending mostly on goods, and don’t include services such as travel, entertainment and recreation.

Restaurants and bars were a bright spot, with sales rising 1.7% over the month, while sales at nonstore retailers—a proxy for online retail sales—fell 3.1%.

Retail...

Jobless claims likely held near a pandemic low last week, a sign the job-market recovery remains on sound footing despite uncertainty surrounding the Delta variant of Covid-19.

Economists surveyed by The Wall Street Journal estimate that the Labor Department will report that unemployment claims were 350,000 last week, nearly the same as 348,000 a week earlier, the lowest level for claims since March 2020.

Applications for unemployment benefits are down more than 50% since the start of the year. They have continued to fall this summer, despite a surge in the Delta variant that has resulted in rising Covid-19 cases and hospitalizations throughout the country.

“Even with the spread of the Delta variant, many people who are vaccinated feel more comfortable doing things than they did previously,” said Gus Faucher, chief economist at PNC Financial Services Group Inc. “Demand for labor remains very strong.”

Continuing claims for regular state programs,...

U.S. factories and service providers reported sharply slower growth in August, the forecasting firm IHS Markit said Monday in its surveys of purchasing managers.

Its index of service-sector activity, the broadest segment of the economy, fell to 55.2 in August from 59.9 in July, hitting an eight-month low. An index of factory activity dropped to 61.2, a four-month low, from 63.4 in July. A reading above 50 suggests activity—as measured by sales, output, prices and other factors—is growing.

But the surveys show that the Delta variant of the Covid-19 virus, which has led to a new wave of infections and hospitalizations and has spooked consumers, is harming the economy.

“The expansion slowed sharply again in August as the spread of the Delta variant led to a weakening of demand growth, especially for consumer-facing services, and further frustrated firms’ efforts to meet existing sales,” Chris Williamson, chief business economist at IHS Markit, said.

The U.S. housing market remained strong in July, with sales of previously owned homes rising at a faster pace than the prior month as high prices prompted owners to put more properties on the market.

Sales rose 2% in July from the prior month to a seasonally adjusted annual rate of 5.99 million, up from a revised 1.6% gain in June, the National Association of Realtors said Monday. July sales were up 1.5% from a year earlier.

Still, the chaotic market is showing signs of calming down—especially for higher-priced homes—with prices easing slightly and the inventory of homes for sale increasing last month.

But the market remains more competitive at lower price tiers, frustrating first-time buyers and pricing some shoppers out of the market.

“It is still a very swift, fast-moving market, but there is some indication that the market is less intensely heated now than before,” said Lawrence Yun, NAR’s chief economist.

The U.S. budget deficit narrowed to $2.5 trillion during the first 10 months of the fiscal year from $2.8 trillion in the same period a year earlier, with the gap between spending and revenue shrinking as the recovery from the pandemic-induced slump boosted tax collection.

Outlays for the 10-month period rose 4% to a record $5.9 trillion, the Treasury Department said Wednesday. Spending has been boosted by pandemic-related costs that included tax credits, expanded unemployment compensation, emergency small-business loans and stimulus checks to households, but Treasury officials said such outlays are generally decelerating.

Federal revenue during the period rose 18% from the same period the previous year to a record $3.3 trillion, largely due to higher receipts from individual and corporate income taxes.

Revenue declined 54% to $262 billion in July from the same month last year. Treasury officials said revenue was unusually high last July because many...

Inflation remained elevated in July as the economic recovery continued, but prices showed evidence of cooling amid pandemic-related supply problems and signs that the recent rise in coronavirus infections is starting to crimp some business activity.

Consumer prices rose 5.4% in July from a year earlier, the same pace as in June, the highest 12-month rate since 2008, the Labor Department reported Wednesday.

On a monthly basis, however, price pressures weakened. The department’s consumer-price index climbed a seasonally adjusted 0.5% in July from June, a significantly slower pace than its 0.9% increase in June from May, though well above the average 0.2% rate from 2000 to 2019.

The CPI measures what consumers pay for goods and services, including groceries, clothes, restaurant meals, recreation and vehicles.

The so-called core price index, which excludes the often volatile categories of food and energy, increased 4.3% from a year before, down from...

The coronavirus pandemic has heated up the long simmering debate on whether a swath of workers should need a license for jobs such as hair braiding, nursing and fitness training.

More than 1,100 occupations are licensed in at least one state, according to the National Conference of State Legislatures. Last year, 29 million workers, nearly a quarter of those employed full time, held a license, the Labor Department said. In the 1950s, about 5% of workers had licenses, according to researchers.

President Biden, a Democrat, and some congressional Republicans say the need to hold a license to work in many different roles blocks Americans from taking well-paying jobs. Those concerns have been raised as job openings rose to a record 10.1 million at the end of June, but 3.4 million fewer workers were in the labor force that month versus February 2020, before the pandemic took hold in the U.S.

Advocates of the requirements say licenses and regulations around...

Small-business confidence dropped in August to its lowest level since early spring, as the rise in Covid-19 cases due to the highly transmissible Delta variant put a damper on expectations and turned entrepreneurs more cautious.

Thirty-nine percent of small-business owners expect economic conditions in the U.S. to improve in the next 12 months, down from 50% in July and 67% in March, according to a survey of more than 560 small businesses for The Wall Street Journal by Vistage Worldwide Inc., a business coaching and peer advisory firm.

The measure is one part of a broader confidence index that also tracks metrics such as small-business owners’ outlook for their companies and their investment and hiring plans. That overall figure remains positive, but fell to its lowest level since March.

At Wizard Studios, an event production company with 25 employees, bookings jumped in May after the Centers for Disease Control and Prevention lifted mask mandates. The...

Orders for cars, appliances and other durable goods decreased slightly in July, as manufacturers continued to grapple with shortages in parts and labor and confront higher material costs.

New orders for products meant to last at least three years decreased 0.1% to a seasonally adjusted $257.2 billion in July as compared with June, the Commerce Department said Wednesday. Economists surveyed by The Wall Street Journal had estimated a 0.5% decline.

Orders increased 0.8% in June from the prior month, unchanged from the initial estimate for the month. Demand for durable goods has increased in 13 of the past 15 months.

The overall number was hurt by a 48.9% decline between June and July on new orders for nondefense aircraft and parts, a category that is often volatile.

Low business and retail inventories have translated to increased demand for manufacturers, but supply-chain issues continue to constrain production and delay some shipments. The Delta...

The cryptocurrency industry is getting so big and enabling so much risk-taking that governments around the globe are taking notice.

Bitcoin traded above $50,000 Monday; its total value now exceeds $900 billion, more than all but a handful of companies. Digital currencies called stablecoins grease ever more trading and issuance. Giant crypto exchanges in Asia offer 100-to-1 bets, often serving traders in countries where their products aren’t legal.

After years of relative inattention, regulators and lawmakers are scrambling to catch up—but it won’t be easy. They aim to rein in a rebellious industry that has adopted the tech world’s blueprint for aggressively deploying new products to quickly amass users—while often leaving regulatory compliance as an afterthought.

Some of the largest crypto firms are under increasing pressure. In recent weeks, Binance, the world’s biggest crypto exchange, was barred from or warned about offering certain crypto...

Toys are getting more expensive, and inflation isn't the only thing to blame. WSJ’s Shelby Holliday looked into why a small Covid-19 outbreak in China has prompted toymakers big and small to raise their prices. Illustration: Adele Morgan

The coronavirus pandemic has heated up the long simmering debate on whether a swath of workers should need a license for jobs such as hair braiding, nursing and fitness training.

More than 1,100 occupations are licensed in at least one state, according to the National Conference of State Legislatures. Last year, 29 million workers, nearly a quarter of those employed full time, held a license, the Labor Department said. In the 1950s, about 5% of workers had licenses, according to researchers.

President Biden, a Democrat, and some congressional Republicans say the need to hold a license to work in many different roles blocks Americans from taking well-paying jobs. Those concerns have been raised as job openings rose to a record 10.1 million at the end of June, but 3.4 million fewer workers were in the labor force that month versus February 2020, before the pandemic took hold in the U.S.

Advocates of the requirements say licenses and regulations around...

Drought is blistering key U.S. cash crops, further elevating prices for staples including corn and wheat.

The punishing dynamics of a torrid summer were evident this month on the Pro Farmer Crop Tour, an annual event in which farmers visit key growing areas across the grain belt to gather data on the coming harvest. Driving along state Route 14 outside of Verdigre, Neb., Randy Wiese turned to see a farmer harvesting hay. The piles were small.

“That farmer is sick to his stomach,” said Mr. Wiese, who farms 800 acres of soybeans and corn in Lake Park, Iowa.

He isn’t alone. Farm incomes have been hit hard over the past two years, first when Covid-19 shutdowns hammered prices and afterward when hot, dry weather reduced output, limiting farmers’ capacity to cash in on rising demand and higher prices.

Extreme heat is baking most of the U.S. North Dakota, South Dakota, Minnesota, Iowa and Nebraska all contain areas of extreme drought, according to data...

WASHINGTON—The World Bank suspended funding for dozens of projects in Afghanistan Tuesday, citing questions over the legitimacy of Taliban rule.

The Washington-based institution has committed around $5.3 billion for reconstruction and development projects in Afghanistan since 2002 through its International Development Association that helps the world’s poorest countries.

As of April, the development association had 12 active projects totaling $940 million in commitments, the bank said in its latest update earlier this year. Separately, its Afghanistan Reconstruction Trust Fund had 15 projects with $1.2 billion committed, it said in its April update.

Under its policies, the World Bank said it cannot disburse funds when there is no agreement by its 189 member countries on whether a country has a legitimate government.

“We have paused disbursements in our operations in Afghanistan and we are closely monitoring and assessing the situation in line...

WASHINGTON— Robinhood Markets Inc. has for years given customers a free share of stock for opening an account or referring friends. The practice could soon cost the online brokerage a lot more money.

Brokerages like Robinhood are required to deliver proxy materials to a public company’s shareholders ahead of annual meetings. They are then reimbursed by the public company for the cost of distribution.

This means that Robinhood’s stock giveaways have saddled some companies with larger bills for delivering proxy statements. Now, the practice is sparking a backlash from companies and scrutiny from market regulators.

One company pushing back is Florida-based drugmaker Catalyst Pharmaceuticals Inc., which says Robinhood’s program cost it more than $200,000 last year and could be even more expensive this year.

“Catalyst has become aware that Robinhood has been giving away shares of Catalyst’s common stock at no charge as part of its promotional...

After a decade of low growth and inflation, Federal Reserve Chairman Jerome Powell unveiled a new strategy a year ago in which the central bank would keep interest rates lower for longer.

Reality has dealt Mr. Powell a different and unexpected challenge: the biggest inflation spike in decades. Consumer prices rose 5.4% in July from a year earlier.

Mr. Powell heads into the Kansas City Fed’s annual conference this week at the center of the debate over how long the currently higher inflation will last, and what the Fed should do about it.

He is managing internal disagreement and weathering external criticism, with economic recovery thrown into renewed turmoil by the rise of the Delta variant.

Some central bank officials expect the recent price surges to reverse on their own, allowing the Fed to stick to the approach Mr. Powell outlined a year ago, intended to generate inflation slightly above 2%. Others see dangers that high inflation will...

Apartment rents are rising fast, boosted by young professionals returning to cities and an expensive housing market that keeps many of them renting.

Stock prices of publicly traded apartment companies have jumped in stride. The FTSE Nareit Equity Apartments index, which tracks these landlords, is up 42% since January, trouncing the S&P 500’s 17% gain during the same period.

Median rent has risen more than 10% over the past year $1,244, according to homesearch website Apartment List. That figure is also 9.4% above where rents stood in March 2020, right before Covid-19 lockdowns began.

One big factor behind the recent increase: Soaring housing prices are forcing many would-be home buyers out of the for-sale market, and they have had little choice but to pay up for rent. As of June, median existing-home sales prices are up 23.4% from a year earlier to $363,300—a record high, according to the National Association of Realtors.

Job losses at the...

Iran this week restarted fuel exports to Afghanistan that had been disrupted by fighting between the Taliban and forces under the now deposed Afghan government, traders in Tehran and former U.S. officials say, with the Taliban now providing critical dollars to the sanctions-crushed Iranian economy from its lucrative narcotics operations.

The burgeoning trade relationship between Tehran and the Taliban threatens to undermine key U.S. pressure campaigns against both.

Iran has been cut off from the global market for the greenback by U.S. sanctions, and the Taliban’s willingness to trade with their neighbor gives Iran rare access to U.S. dollars it needs to import essential goods and bolster its depreciated currency.

Meanwhile, the arrangement enables the Taliban, who are also cut off from trade and finance by international sanctions, to purchase basic commodities vital to keeping the ailing Afghan economy running.

Iranian traders, who had been...

Orders for cars, appliances and other durable goods decreased slightly in July, as manufacturers continued to grapple with shortages in parts and labor and confront higher material costs.

New orders for products meant to last at least three years decreased 0.1% to a seasonally adjusted $257.2 billion in July as compared with June, the Commerce Department said Wednesday. Economists surveyed by The Wall Street Journal had estimated a 0.5% decline.

Orders increased 0.8% in June from the prior month, unchanged from the initial estimate for the month. Demand for durable goods has increased in 13 of the past 15 months.

The overall number was hurt by a 48.9% decline between June and July on new orders for nondefense aircraft and parts, a category that is often volatile.

Low business and retail inventories have translated to increased demand for manufacturers, but supply-chain issues continue to constrain production and delay some shipments. The Delta...

WASHINGTON—The U.S. program to help tenants and landlords struggling with the impact of the Covid-19 pandemic is still moving at a slow pace and has delivered a fraction of the promised aid, data released by the Treasury Department on Wednesday show.

Since December, Congress has appropriated a total of $46.6 billion to help tenants who were behind on their rent. As of July 31, just $4.7 billion had been distributed to landlords and tenants, the Treasury said.

Wednesday’s data show that rental aid has begun to move faster in some states, though July’s $1.7 billion reflected only a modest overall increase from the $1.5 billion distributed in June.

While the program is overseen by the Treasury, it relies on a patchwork of more than 450 state, county and municipal governments and charitable organizations to distribute aid. The result: months of delays as local governments built new programs from scratch, hired staff and crafted rules for how the money...

Orders for cars, appliances and other durable goods decreased slightly in July, as manufacturers continued to grapple with shortages in parts and labor and confront higher material costs.

New orders for products meant to last at least three years decreased 0.1% to a seasonally adjusted $257.2 billion in July as compared with June, the Commerce Department said Wednesday. Economists surveyed by The Wall Street Journal had estimated a 0.5% decline.

Orders increased 0.8% in June from the prior month, unchanged from the initial estimate for the month. Demand for durable goods has increased in 13 of the past 15 months.

The overall number was hurt by a 48.9% decline between June and July on new orders for nondefense aircraft and parts, a category that is often volatile.

Low business and retail inventories have translated to increased demand for manufacturers, but supply-chain issues continue to constrain production and delay some shipments. The Delta...