The real inflation driver

With all the things that have gotten more expensive (and then less expensive, even if it doesn’t feel like it) over the past 18 months, it should come as no surprise that housing costs are still what’s largely driving US inflation. While the Federal Reserve rate-hiking campaign to tame overall price surges seems to be working, shelter inflation was responsible for 90% of the Consumer Price Index’s otherwise modest monthly gain last month. A broad measure that includes rents, hotels and lodging, as well as home insurance, shelter is up 7.7% from one year ago. In fact, the first American city to tame inflation, Minneapolis, owes its success to affordable housing. And while rents are starting to flatline in some places, they’re soaring in (of course) New York. Then there’s China’s housing crisis, which has worsened amid declining sales and fears that one of its largest developers, Country Garden Holdings, may be the next giant to default. But while analysts are watching China’s property sector woes for signals about the global economy, data in the US continues to trend positive, showing receding inflation along with moderating growth in job gains and wages, fueling predictions that the Fed will succeed in fully defusing price pressures without triggering major job losses or a recession. But the good news “comes with an asterisk,” Mohamed El-Erian writes in Bloomberg Opinion. “Commodity prices could complicate the Fed’s ability to navigate a soft landing for the economy.”

The race for the GOP’s 2024 presidential nomination is intensifying as twice-impeached frontrunner Donald Trump faces multiple felony prosecutions that could, if he’s convicted, land him in prison. The Iowa State Fair, which will attract the Republican field, is held this weekend and the first GOP debate is set for Aug. 23. Trump says he hasn’t decided whether he will take part, which requires a pledge that he’ll support the party’s nominee (even if it isn’t him). But his main rival, Florida Governor Ron DeSantis, isn’t doing a great job of capitalizing on Trump’s legal jeopardy, as he just replaced his campaign manager in the latest shakeup of his so-far troubled run.

Ecuador, a close US ally, was thrown into turmoil after leading presidential candidate and anti-corruption journalist Fernando Villavicencio was assassinated less than two weeks before elections were to be held. Six Columbian nationals were quickly alleged by the government of President Guillermo Lasso to have plotted the killing, and they subsequently appeared in court. Lasso, who recently dissolved congress to avoid impeachment, has deployed troops to impose a state of emergency. Another US ally, Niger, faced possible intervention by West African neighbors after a military coup, the latest in a series across the continent, amid reports that democratically elected president Mohamed Bazoum was being deprived of food and water.

Wildfires fanned by winds from a far-off hurricane killed at least 55 people, with 1,000 still missing, on the Hawaiian island of Maui, the latest catastrophe in a summer of climate crisis-related destruction. With peak hurricane season approaching, a nonprofit created as an insurer of last resort has become Florida’s biggest property insurer as private companies flee the state. And one of the fastest evolving species, a type of moss that survived the extinction of the dinosaurs, may not be evolving fast enough to survive rising temperatures.

WeWork said there is “substantial doubt” about its ability to continue operating, with the co-working company citing sustained losses and canceled memberships to its office spaces. Zoom, which became an essential tool during the height of pandemic remote work, called people back to the office two days a week. But the move “hardly spells the end of the work-from-home era,” Sarah Green Carmichael writes in Bloomberg Opinion. “What Zoom’s decision really shows is that hybrid work—not fully remote work and not five-days-a-week in-person work—is the new normal.”

A Mexican luxury real estate developer is eyeing Los Cabos and the Nayarit Riviera for its next venture. “It’s too late for Tulum,” Be Grand Chief Executive Officer Nicolas Carrancedo says. Once left out of the paid-influencer game, student athletes from California to Florida are now leveraging platforms like TikTok and Instagram for hefty cash (like $25,000 a post). Major media companies have stepped up their efforts to resolve a three-month-long strike by writers and are preparing a new offer.

Amid the bloodbath of big tech mass firings, entry to Y Combinator has become the most competitive it’s ever been. Silicon Valley’s premier business incubator has received 44,000 applications so far this year, the most ever, and the acceptance rate for its summer batch was less than 1%, the lowest in the organization’s history. Garry Tan, the president and chief executive of Y Combinator, says he anticipates “little tech” will thrive even in a turbulent economy. Terminations of tens of thousands of people by Silicon Valley giants over the past year have, according to Tan, freed those jettisoned employees to work at important new companies. “I think a lot of large companies started treating their employee base almost as a place to park resources and almost as a competitive moat versus the other giants,” Tan says on this week’s episode of The Circuit with Emily Chang.

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