Overview of The Wall Street Journal: The Cost of Living Crisis Isn’t Going Away
This episode of WSJ’s What’s News covers the post-midterm political landscape, including Chuck Schumer’s likely return as Senate Democratic leader, still-tight races that could determine the size of the Democratic majority, and how a divided Congress may constrain President Trump at home while leaving him more room to maneuver in foreign policy. It also focuses on the persistence of inflation and high interest rates, the strain they’re putting on housing, and how tech companies are facing growing political and logistical headwinds around data center expansion.
Senate Control, Leadership, and Remaining Vote Counts
Schumer is likely staying on top
- Despite some incoming Democratic senators saying they won’t vote for him, Chuck Schumer is expected to be reelected Senate Democratic leader.
- His position has been strengthened by Democrats’ stronger-than-expected Senate performance.
- No serious challenger has emerged, and many senators view him as a key architect of the party’s success.
The Democratic majority is still unsettled
- The final Senate split could still be 54, 55, or 56 seats.
- Alaska: Mary Peltola and Dan Sullivan are separated by fewer than 1,000 votes, but ranked-choice tabulation means the result may take weeks.
- Mississippi: Democrat Scott Colombe holds a narrow lead over incumbent Cindy Hyde-Smith, with absentee and affidavit ballots still outstanding.
- A Colombe win would be a major upset in a state Trump won comfortably.
Trump, Congress, and Foreign Policy
Congress may constrain domestic policy, but foreign policy could be different
- Reported analysis suggests a remade Congress can block nominees, slow spending, and push back on domestic initiatives.
- But Trump may have more room in foreign policy and trade, where presidents historically have greater latitude.
Iran remains the key foreign-policy dilemma
- Trump’s options on Iran range from escalating military action to seeking a face-saving exit.
- The episode emphasizes that political damage from war is less of a concern now that he is not running again, but the situation remains difficult and unpredictable.
Cuba, Israel, and Ukraine
- Cuba: There’s speculation Trump could seek a quick, lower-cost pressure campaign similar to Venezuela, though timing may depend on what happens with Iran first.
- Israel: The episode says there may be growing U.S.-Israel distance, and that Congress could matter a lot because of its role in military aid.
- Ukraine: Congressional funding power could support weapons aid, but there is concern Trump may push for a peace settlement favorable to Russia.
Inflation and the Cost of Living Remain Stubborn
Central banks are still fighting inflation
- The episode argues that the cost-of-living crisis is not easing yet.
- Central banks in Australia, Brazil, and Sweden have warned that inflation is staying elevated.
- The Bank of England, Federal Reserve, and ECB are still expected to keep raising rates or remain restrictive.
Why inflation may persist
- Rising energy costs tied to the war in Iran are a major factor.
- El Niño could push food prices higher.
- Energy costs are still filtering through to other parts of the economy, especially in Europe.
- The key takeaway: inflation may not have peaked, and relief could still be months away.
Housing Is Suffering Under Higher Rates
Zillow sees a frozen market
- Zillow reported weaker traffic to its apps and sites, reflecting one of the toughest housing markets in years.
- CEO Jeremy Wacksman said buyers and sellers are largely stuck on the sidelines because of rate shock.
- Mortgage rates have risen to near three-year highs after recent bond sell-offs.
Earnings beat doesn’t satisfy investors
- Zillow’s revenue rose 7% year over year in the third quarter, but that wasn’t enough to calm investors.
- The stock fell sharply after the report, signaling continued market concern about housing demand.
Tech Companies Face More Resistance to Data Centers
AI growth is running into local political limits
- Tech companies are struggling to secure enough computing power and build the infrastructure needed for AI.
- Voters and state leaders are increasingly pushing back on data center development because of energy use, land demands, and local impacts.
Meta says it’s getting harder to expand
- Meta’s Dina Powell McCormick said she spends a large share of her time trying to secure compute capacity.
- She also noted that building data centers is becoming harder and requires local political support.
- Governors in Ohio and Texas have reportedly called for conditional freezes on new data center construction.
- Meta has major data center projects underway in those states and in Louisiana.
Entertainment Giants Benefit From Blockbusters
Nintendo and Sony are doing well despite a tough macro backdrop
- Nintendo reported an 11% increase in first-half net profit, helped by a surge in intellectual property income tied to the success of the Super Mario Galaxy movie.
- Sony raised its annual earnings forecast after Spider-Man helped drive strong results, with the film grossing more than $900 million globally.
- Both companies are benefiting from broader strategies that extend beyond gaming into films, theme parks, and other entertainment businesses.
Key Takeaways
- Democrats are likely to keep control of the Senate, and Schumer is expected to remain leader.
- Final Senate seat counts are still uncertain, especially in Alaska and Mississippi.
- Trump may face more resistance domestically than internationally from the next Congress.
- Inflation and high rates are still the dominant economic story, with little immediate relief in sight.
- Housing remains under severe pressure because of elevated mortgage rates.
- AI infrastructure expansion is meeting growing political pushback, especially around data centers.
- Nintendo and Sony are benefiting from the success of major film franchises, showing how entertainment IP is becoming increasingly valuable.