Folder Permissions Error from WordPress on Localhost

I am no longer able to auto-update my local WordPress install. The problem started after fixing dropbox file permission errors. Now when I try to install I get this message:

Downloading update from https://downloads.wordpress.org/release/wordpress-3.9.2-partial-1.zip…

Unpacking the update…

Could not create directory.

Installation Failed

sudo chmod -R 755 myblog gives same error.

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sudo chmod -R 757 myblog works, but 757 is bad.

Why is it failing and is there a way to get it to work with 755?

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