WASHINGTON—Households making at least $1 million in income would face a 10.6% tax increase in 2023 under House Democrats’ plan, raising their average federal tax rate to 37.3% from 30.2%, according to the nonpartisan Joint Committee on Taxation.

The committee analysis, released Tuesday, shows that low-income households would get significant tax cuts from the proposal for the first few years, largely because of the extension of the expanded child tax credit.

This should be the best of times for low-wage workers, as pandemic-induced labor shortages force employers to sharply raise pay. Yet for many, it doesn’t feel that way, because those same disruptions have pushed inflation to near its highest rate in over a decade.

Troy Sutton, age 61, lost a job as a custodian at the start of the pandemic in 2020 that paid $12 an hour, and he spent more than a year unemployed. This past summer, he landed a job as a custodian at the University of Pennsylvania he said pays $18 or more an hour.

When it comes to Federal Reserve interest-rate policy, what inflation is doing now matters much less than what it will be doing next spring.

What inflation is doing now is running fairly high. The Labor Department on Tuesday reported that its index of consumer prices rose a seasonally adjusted 0.3% in August from July, putting it 5.3% above its year-earlier level. Core prices, which exclude food and energy items in an effort to better capture inflation’s trend, were up 4% from a year earlier.

We are delighted that you'd like to resume your subscription.

You will be charged $ + tax (if applicable) for The Wall Street Journal. You may change your billing preferences at any time in the Customer Center or call Customer Service. You will be notified in advance of any changes in rate or terms. You may cancel your subscription at anytime by calling Customer Service.

Please click confirm to resume now.

Reserve Bank of Australia Gov. Philip Lowe, on Tuesday moved to strongly push back on current market pricing suggesting the central bank could raise interest rates as early as late 2022, saying the bank’s desired wages and inflation targets remain a long way off.

Mr. Lowe also poured cold water on the idea that the RBA would raise interest rates soon to rein in runaway house-price growth.

“These...

Inflation cooled slightly in August but remained strong, as a surge in Covid-19 infections slowed economic growth and pandemic-related shortages of labor and supplies continued to drive up prices.

The Labor Department said last month’s consumer-price index rose a seasonally adjusted 0.3% in August from July, slower than the 0.5% one-month increase in July, and down markedly from June’s 0.9% pace. Prices eased for autos, with used vehicle prices dropping sharply, and hotel rates and airline fares declined in August from July.

The bond market hasn’t fully priced in the framework the Federal Reserve put in place a year ago to allow inflation to overshoot a 2% target to make up for past shortfalls, Capital Economics says in a research report released Wednesday. “While yields have risen over the past year as the economy has recovered, we suspect they still do not fully reflect the implications of the new policy framework, and the inflationary pressures more generally,” the report says. The market will need to adjust, the report adds, noting “we think that as it becomes apparent that above-target inflation is proving more persistent, long-dated...

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...

It’s pretty unlikely Federal Reserve Chairman Jerome Powell will announce in his speech Friday that the central bank is officially ready to start pulling back on its asset-buying stimulus effort, economists reckon.

Mr. Powell is set to speak on Friday at 10 a.m. ET as part of the Federal Reserve Bank of Kansas City’s annual Jackson Hole economic symposium. The event was moved last week to an all-online format because of the rising risks around the coronavirus pandemic.

Mr. Powell will speak amid broad expectations the Fed will soon be able to pull back on its $120 billion a month in Treasury and mortgage bond purchases, as the job market continues to make a solid pace recovering what it lost during the Covid crisis’s early stages.

Recently released meeting minutes from the Fed’s late July policy gathering showed that officials believed then that asset buying could start to slow down—”taper” in market parlance—by the end of this year. That view is...

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...

It is probably too soon for the Federal Reserve to increase the counterparty cap in place for its reverse repo facility, Wrightson ICAP said in a note to clients over the weekend. In comments sparked by the Fed’s late July meeting minutes, the research firm said there aren’t signs yet that money-market funds are running into individual constraints that limit how much cash they can park at the Fed via reverse repos. Referring to the $80 billion per-firm cap, “in the July 31 money fund reports collated by the Office of Financial Research, no individual fund had a [reverse repo] balance of more $60 billion, and only four...

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...

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...

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...

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 that 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 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 a year earlier, NAR...

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 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...

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,...

SYDNEY—The Reserve Bank of Australia suspending plans to taper its government bond-buying program in September is now a 50/50 proposition, with the central bank already moving to pulp the upbeat economic forecasts it published just weeks ago.

The debate around the RBA’s board table on Sept. 7 over the scheduled reduction in weekly government bond purchases is set to be vigorous as surging Covid-19 cases shutter key capitals, fueling recession fears.

In...

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...

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.

Minutes of the Federal Reserve’s late July monetary policy meeting didn’t reveal much concern among central bank officials about the massive flow of cash into the Fed’s reverse repo facility.

As part of a broader debate over whether the central bank should pare its $120 billion a month in bond buying stimulus, Fed officials also mulled recent developments regarding the reverse repo facility, according to the minutes released Wednesday.

The...

Jobless claims fell to a pandemic low of 348,000 last week, suggesting the labor market continues to heal even as the Delta variant causes uncertainty.

New jobless claims are down more than 50% since January, but have hovered in a fairly narrow range between 424,000 and 368,000 since late May.

The Delta variant has caused recent increases in new Covid-19 cases and hospitalizations throughout the country. But while that might cause the pace of growth to ease, some economists say the dynamic between Covid-19 and economic activity has evolved over the past year.

“The data we’re seeing shows that while certain consumer areas may be starting to cool, activity does remain solid and labor demand remains extremely strong,” said Robert Rosener, senior U.S. economist at Morgan Stanley. Mr. Rosener said rising numbers of Covid-19 cases wouldn’t necessarily translate to a significant increase in jobless claims.

Employers added 943,000 jobs in July, the best...

Norway’s central bank kept its key interest rate at zero at Thursday’s monetary policy meeting, as expected, and reiterated that a rate hike is likely in September.

Norges Bank said the reopening of society after coronavirus-related restrictions has driven a marked rise in activity, and unemployment has fallen further. At the same time, there is still uncertainty as to the evolution of the pandemic and the impact on the Norwegian economy.

A...

Bank Indonesia kept its benchmark interest rate unchanged as it looks to maintain the stability of the rupiah and help the economy recover from the pandemic.

The central bank maintained its seven-day reverse repo rate at 3.50% on Thursday. The decision was in line with the expectations of nine economists polled by The Wall Street Journal.

The...