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 euro is trading near its lowest level against the dollar in nine months as investors bet that the eurozone will maintain lower interest rates and have a slower economic recovery than the U.S.

The European Central Bank has indicated that it intends to keep financial conditions loose for the foreseeable future as it cushions the eurozone’s economic recovery. In contrast, Federal Reserve officials have signaled they are on track to begin reversing their easy-money policies later this year.

The policy split means investors may get paid more to hold U.S.-dollar assets like Treasurys than they would eurozone assets, where government bonds in Germany and some other countries already have subzero yields.

“The idea is that as we slowly get into a bit more of a mature phase of the recovery in developed markets, that central banks are going to start tightening policy but the ECB is going to sit right back at the end of the queue,” said Simon Harvey, senior...

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

WASHINGTON—House Democratic leaders made a last-minute commitment to vote on passing the bipartisan infrastructure bill by the end of next month, in hopes of closing a rift with centrist Democrats and clearing the way for a vote later Tuesday advancing President Biden’s legislative agenda.

The House was expected to vote midday Tuesday on a procedural measure that would advance both a roughly $1 trillion infrastructure bill already approved by the Senate and pass a roughly $3.5 trillion budget framework. Approval of the budget blueprint is the first procedural step in unlocking a process to muscle through a $3.5 trillion education, healthcare and climate package in the Senate without GOP support.

House Rules Committee Chairman Jim McGovern (D., Mass.) on Tuesday changed the procedural motion, known as a rule, to specify that the House would consider the infrastructure bill on Sept. 27, if it hadn’t already done so.

That commitment marks a shift from...

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 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...

No longer facing serious military opposition, Afghanistan’s new Taliban rulers are grappling with a new threat: an economic collapse that could fuel renewed challenges to their rule and has already put pressure on them to share power.

There has been no legitimate government of Afghanistan since President Ashraf Ghani and most ministers escaped Kabul on Aug. 15. In the eight days since then, the banks and money exchanges have remained shut and prices for basic commodities have surged. Economic activity has ground to a halt.

“People have money, but it’s in the bank, which means they no longer have money now. It’s hard to find cash,” said Bahir, a Kabul resident who worked as a financial officer for a construction company. “That’s why the whole business in Kabul has stopped.”

In the 1990s, a Taliban takeover revitalized the Afghan economy, ending fighting between rival warlords and reopening roads to trade. At the time, Pakistan, Saudi Arabia and the...

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 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...

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.

No longer facing serious military opposition, Afghanistan’s new Taliban rulers are grappling with a new threat: an economic meltdown that could fuel renewed challenges to their rule and has already put pressure on them to share power.

There has been no legitimate government of Afghanistan since President Ashraf Ghani and most ministers escaped Kabul on Aug. 15. In the eight days since then, the banks and money exchanges have remained shut and prices for basic commodities have surged. Economic activity has ground to a halt.

“People have money, but it’s in the bank, which means they no longer have money now. It’s hard to find cash,” said Bahir, a Kabul resident who worked as a financial officer for a construction company. “That’s why the whole business in Kabul has stopped.”

In the 1990s, a Taliban takeover revitalized the Afghan economy, ending fighting between rival warlords and reopening roads to trade. At the time, Pakistan, Saudi Arabia and the...

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. economic expansion is losing momentum.

Softening demand at a time of rising Covid-19 cases, labor shortages and persistent knots in shipping networks are restraining businesses in the U.S. and across the globe, according to private-sector surveys released Monday.

The biggest shifts are occurring in the U.S., which has helped drive the global economic expansion since last year’s severe recession. 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...

SYDNEY—One of this year’s hottest commodities is flaming out.

The price of iron ore has fallen roughly 40% since mid-July on concerns about demand from China, which makes more than half of the world’s steel. The downturn has dealt a blow to producing countries, notably Australia and Brazil, that are battling to protect fragile economic recoveries from outbreaks of the highly contagious Delta variant of the coronavirus.

The benchmark price fell as low as $130.20 a metric ton on Thursday following a 15% single-day nosedive to its lowest value since November 2020, according to S&P Global Platts, which publishes daily prices. The commodity, which hit a record above $233 a ton as recently as May, bounced slightly to $139.10 a ton on Friday.

Other commodities including oil and copper have been falling on worries that rising Covid-19 cases might hobble the global recovery, but not at such a rapid pace. Iron ore hasn’t fallen this far this fast since spot...

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...

TOKYO—Half or more of Japan’s huge government debt doesn’t really exist. And even if it does, the country needs a lot more of it.

Those are a couple of the arguments being heard in Tokyo as the rich world’s most-indebted government relative to its size prepares for a new round of spending this fall that could reach into the hundreds of billions of dollars.

Japan often serves as a tryout venue for policies that later debut on the world economy’s biggest stage, the U.S. The Japanese central bank was a pioneer in introducing zero interest rates and buying large quantities of government bonds to stimulate a sluggish economy, tools subsequently used by the Federal Reserve.

In debt as well, Japan has led the pack. Its central-government debt first surpassed the size of the economy about 20 years ago. Now the U.S. is crossing that threshold too, and Congress is debating trillions of dollars more in proposed spending.

Tokyo’s central government is...

The U.S. economic expansion is losing momentum.

Softening demand at a time of rising Covid-19 cases, labor shortages and persistent knots in shipping networks are restraining businesses in the U.S. and across the globe, according to private-sector surveys released Monday.

The biggest shifts are occurring in the U.S., which has helped drive the global economic expansion since last year’s severe recession. 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 last month 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...

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...

Three vital issues for investors remain uncertain as the Federal Reserve moves toward tapering its bond buying. Will this quantitative tightening mean Treasury yields go up or down? Will stocks do better with rising or falling bond yields? And, a linked issue, is the stock-bond relationship that has held for the past three decades going into reverse?

Few people share my first uncertainty, because it seems so obvious that if the Fed buys fewer Treasurys, the price will drop and hence the yield rise. It is basic supply and demand, goes the response: Duh.

It is certainly true that all else equal, fewer bond purchases should mean a higher yield. But all else isn’t equal, because the Fed’s discussion of withdrawing stimulus shows a shift in mentality toward tighter monetary policy. Tighter monetary policy means less growth and inflation in the long run, and so lower long-term bond yields. The balance between the demand impact of less Fed buying and the perception...

Sales of previously owned homes rose in July for the second straight month as high prices prompted more homeowners to put their houses on the market.

Existing-home sales rose 2% in July from the prior month to a seasonally adjusted annual rate of 5.99 million, the National Association of Realtors said Monday. July sales rose 1.5% from a year earlier.

The frenzied housing market of earlier this year is showing signs it is winding down, but the market remains competitive for buyers. The inventory of homes on the market has risen in recent months, but the supply of homes on the market remains well below demand, according to market participants.

“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. “There are more homes available for sale compared to one or two months ago.”

The median existing-home price rose 17.8% in July from...

The bipartisan infrastructure bill approved by the Senate this month is the latest effort to inject federal money into public transit agencies. But all that money likely won’t buy what transit really needs: more riders.

Unless ridership recovers from its pandemic-induced drop, agencies will again confront large budget deficits once the federal money runs out in three or four years, analysts say. That could mean service cuts and fare increases, according to transit agencies.

“As soon as the money stops flowing, transit agencies are going to be in the same position as they were before,” said Baruch Feigenbaum, a transportation policy expert at the libertarian-leaning Reason Foundation.

New York’s Metropolitan Transportation Authority, for instance, expects to use up its $14.5 billion allocation of federal aid by 2024, at which point it will face a $3.5 billion two-year shortfall.

Transit ridership nationwide fell by 78% between February and April...

August surveys of purchasing managers in some of the world’s largest economies—including the U.S.—will offer the freshest indication of how the rapid spread of the Delta variant of Covid-19 is affecting economic activity. Economists expect to see a modest slowdown in the expansion of the services sector in both the U.S. and Europe and declines in activity in both Japan and Australia.

U.S. home prices hit a record in June amid a housing boom that is pitting low mortgage rates and strong demand against limited supplies of homes for sale. Economists are forecasting a small drop in existing-home sales in July, to an annual pace of 5.83 million from 5.86 million a month earlier, as price and supply constraints lock more would-be buyers out of the market.

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

The value of bitcoin 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 investments in the U.K., Italy, Germany,...