Photo display missing in post edit box, Edit Image icon disabled

In the past, when I added a photo to a post it would display within the edit box in visual mode. Now, when I add a photo all I see in visual mode is a blank grey area where the picture would display. When I check the published post it displays fine.

This new behavior is not good because I need to see the picture as it will display (with caption, etc.) in the published post. Also when I click on the gray space in the post edit box, and then click on the “edit image” icon, nothing happens. In the past, the photo edit box would pop up so I could edit the photo.

I’m hoping this is not the intended behavior under the recently updated WP version.