Marketplace - Let's import some inflation

Episode Date: August 19, 2026

The price of imported goods, sans energy, was up 4.5% year-over-year in July. Data center buildout is driving that jump — imported computer prices were up 17%. In this episode, we explain why import price inflation is distinct from regular inflation and what that leap means for Fed rate-setting. Plus: U.S. oil firms ink deals with Venezuelan producers, the Treasury excecutes on major bond buybacks, and Kai meets a duo trying to turn Hollywood upside-down — or, at least, vertical. Every story has an economic angle. Want some in your inbox? Subscribe to our daily or weekly newsletter.Marketplace is more than a radio show. Check out our original reporting and financial literacy content at marketplace.org — and consider making an investment in our future.Read the stories in today’s episode:What happens when import prices skyrocket? More inflation, of courseU.S. oil companies ink production deals with VenezuelaMicrodramas get the "Hollywood treatment" at this new studio

It's bonds again today, gang. We didn't want to, but we kind of got it. From American public media, this is Marketplace. In Los Angeles, I'm Kyle Rizzdahl. It is Wednesday, today the 19th of August. Good, as it always is, to have you along, everybody. So, true story. We were going to take a day off from the bond market today. Can't go to that well too many times, you know. But then the Treasury Department changed our minds when it, decided this morning, you know what? Those yields on the 30-year bond are a little too high for

our liking. So we've brought Robin Brooks back again. He's a senior fellow at the Brookings institution. Hi, Robin. Great to be with you, Kai. Okay, layman's terms, please. What did Treasury do this morning? So Treasury buyback is basically announcing that you're going to buy literally long-term treasury bonds back. And remember, Kai, that yields, which is basically the interest rate on bonds, moves inversely with prices. So when you buy something back, the price goes up and the yield goes down. So this is something the Treasury announced because basically the pain threshold for yields going up was crossed. Do you think that Secretary Bessent has solved the underlying problem that you and I discussed yesterday?

The problem is fiscal policy, right? We have deficits that in a non-crisis period, we don't have COVID, we don't have the pandemic, we have a deficit of 7% of GDP, give or take. And if you want yields to come down sustainably, then that, that. is what you need to rein in. I would call what we're doing now, this buyback. I would call it financial engineering. It is really shuffling the deck chairs. There will come a time, then, one might infer, that the markets are going to, you know, wise up, as it were, and do with yields what they will. Totally. In fact, markets today are doing very much that the dollar is tumbling and gold is going through the roof. Gold and precious metals across the board are up four or five

percent. Bitcoin is up six percent. So remember Kai last year this time, the debasement trade that was all about precious metals got going. We had crazy rallies in precious metals across the board. That's what the market is trading. And it is basically trading debasement and fiscal dysfunction. All right. For the for the non-financial types among us, debasement trade in 30 seconds, please. What is that? It is basically markets saying, hey, wait a minute, fiscal policy is out of control. The government is unable to get on top of this. It is going to print money to inflate away the value of debt. And so the market buys safe havens of which precious metals are one expression. I really, really, really don't want to be alarmist here.

because you can see how people would be hearing you and me talking and many others right in the financial press about this. Yesterday you were about a six or seven in terms of how worried you were about this. It's a reminder of, I guess it was Hemingway who said, you know, go broke slowly and then all at once. I mean, the bond markets have decided in relatively quick order that they're not happy, right? And so calm things down a little bit and tell me that there's hope out there that this is going to get taken care of and not get worse. So I'd say two things. If I were Secretary Besson and I looked at what happened in the bond market versus what happened in the dollar and what happened in gold, I would be pretty unhappy that this bang for the buck got me the 30-year treasury yield going only from 5.3 to 5.2. But the dollar is tumbling. This is not a good trade-off. We know Secretary Besson likes a weak dollar, though, right?

Yeah, the thing with the weak dollar is it's tricky, right? You want it to go down, but you don't want it to tumble because that's bad for reserve currency status. And in the end, we need foreigners to invest in the United States. We have a big current account deficit. So you want to tread that line very carefully. Japan is a warning sign that if you fiddle too much with your yields, and we talked about this yesterday, Kai, then your current can really go into a depreciation spiral. The U.S. doesn't want that. Right. Reasonably quickly, 45 seconds. What do you suppose Chairman Warsh is thinking right now? Because we're moving sort of to the short end of the curve, which we talked about yesterday. I mean, ideally, I would say, you know, in the big scheme of things, we're talking in these

buybacks, a couple billion of dollars. Yeah. Versus the outstanding debt in the Treasury markets, which is trillion. So my guess is that Warsh is going to ignore all this and focus on inflation and growth. So I think he'll let this be a side show. Should he? I'm not sure he should. Maybe he'll talk about it at Jackson Hole in a couple of weeks.

Robin Brooks at the Brookings Institution helping us out with the bond market once again. Robin, thanks a bunch. Thanks for having me back. See you. Wall Street halfway through this week. Traders looked around, decided things aren't all bad and traded accordingly. We will have the details. else when we do the numbers.

It's going to be Wednesday next until we get a real update on inflation, the Personal Consumption Expenditures Price Index from the Bureau of Economic Analysis. There are, of course, a bunch of things that go into PCE, one of which we were alerted to today the price of imported goods. They were down in July, off 410% from June, thanks mostly to lower fuel costs. When to do that thing that policymakers do, though, and strip out energy, import prices were actually up, up four and a half percent. In fact, from a year ago, the biggest year on year increase since 2022.

Marketplace of Justin Ho has more now on what is pushing them up and what that's going to mean. The most significant imports that are getting more expensive are capital goods. Particularly capital goods that are computers and semiconductors. Sarah House is senior economist with Wells Fargo. She says that's because of higher demand from data center construction. In fact, the price of imported computers has risen 17. percent of the past year. To put that in perspective, even at the height of the post-pandemic reopening and supply chain stress, there are only 4 percent. So it does show just how insatiable appetite is for

all things related to the AI built out. Data Center construction is also pushing up the price of imported metals, including copper and tin, and driving the price of consumer goods higher, says Menzsche Chen, an economics professor at the University of Wisconsin-Madison. If you have a increase in prices of semiconductors, that's got to be fed into the chain of prices for all sorts of consumer goods. I can't even think if my coffee maker is without a chip. Higher import prices aren't necessarily going to have a direct impact on overall inflation. Consumers spend a lot more money on services than they do on imported goods. But Orrin Kalachkan, an economist nationwide, says consumers are still going to feel higher import costs.

We're still in this environment here of inflation still running fairly hot. It's going to take some time for us to get back down to that softer trend-like inflation data that we saw, you know, call it pre-pendemic. That's because other factors drive up the price of an imported good after it reaches the U.S., says Diane Swank, Chief Economist at KPMG. It's before tariffs are applied. It's before it actually shows up on a store shelf for the most part. And it takes a little bit of time for those things to actually show up then in the prices of the goods that were actually buying. In other words, Swank says the increase in import, import prices is distinct from other inflationary pressures.

It gives us an early indicator that there's some global pricing pressures out there that we're having to deal with. And that the Federal Reserve will have to deal with when it makes its next decision on interest rates. I'm Justin Howe for Marketplace. Stop me if you've heard this one before. President Trump has put a hold on a big batch of tariffs that he had threatened. It's Canada this time. There's a maybe sort of deal announced two. hours before the midnight last night deadline putting off for three days 50% import taxes

on a whole bunch of Canadian goods. Details, as they tend to be when these kinds of tariff announcements are made, are sparse. But all the same we thought this would be a good time to hear from somebody hard at work in the trenches of international trade. Gretchen Blau is a customs brokerage

manager at Logistics Plus in Erie, Pennsylvania. So we've been keeping an eye on the negotiations to see if they would take place or not, and it's been a little bit back and forth as to whether or not these would be imposed. We have quite a few customers that import auto parts from Canada, so that was of concern. Even in the local area here, we're near a border crossing.

We're about two hours away from Buffalo. We have a lot of customers that do a lot of business back and forth across the border, so they were expediting shipments because, of course, the extra freight would be far less than 50% tariffs. I wasn't really surprised to see the can get kicked down the road because we've seen this in the past. In fact, last year there were tariffs imposed on Canada and Mexico that lasted three days and then they were rescinded. It's getting to be like, okay, yeah, this got pushed off again. The timing is different than we were told again.

And it leads to a lot of frustration in planning for our customers, for, you know, passing along information for us. I think if anything, our customers' expectations of what we know ahead of time are lower, unfortunately. Prior to all these shakeups, they seemed to think we had some kind of insider information, and we would repeatedly tell them that, no, we don't. I think finally that's coming across that we're just doing the best we can with the information we're being given. And we're passing along as quickly as we as possible to try and help our customers out.

This afternoon and tomorrow we'll be hearing and what will be crossing and get an anticipation of the volume. And then it's kind of all hands on deck, you know, all the administrative processes that need to be done to anticipate the tariff. I anticipate refunds. It's a big strain to the supply chain. Not only us in customs, but just supply chain managers at, you know, the average mom and pop or a huge manufacturing concern. To de-stress, I always joke to everyone that my son has a dozen pairs of hand-knit socks now to de-stress after work.

Gretchen Blau, Customs Brokerage Manager, Logistics Plus, Erie, Pennsylvania. Coming up. Scrollable, vertical, no more than two or three minutes, about as much as your attention span. Two minutes here, three minutes there, where does the day go? First, though, let's do the numbers. Down Dustra's up 119 points on the day, two-tenths percent, 53,000, 463. Hasdak gained 41 points. That is 2 tenths percent. 26,331. S&P 500 up 16 points. Also two-tenths percent, 7707. T.J.X. Companies, parent of T.J. Max and home goods and marshals, they raised their full-year profit forecast today. T.J.X. plunged 4 and 2-tenths percent because capitalism. That's the way it works.

Competitor Burlington stores increased two-tenths of 1 percent on the day. Justin was talking about prices for imported goods. manufacturers often used raw parts that are imported caterpillar, maker of agriculture and construction equipment, slumped 2 and 9 tenths percent on the day. You are listening to Marketplace. This is Marketplace. I'm Kai Resdal. I know it seems like forever ago, but you remember back in January before the president's war with Iran, when the United States grabbed Venezuelan President Nicolas Maduro, Venezuela, the country with more proven oil reserves than anywhere else on the planet? Well, as it happens, there have been some announcements this week that some U.S. energy companies are expanding their footprint in Venezuela.

So we figured today's as good a day as any for an update on the state of Venezuelan energy resources and U.S. interest therein. Marketplace is Elizabeth Troval has that one. Last night, Venezuela's oil minister, Paola Enau, spoke to Venezuelan state television from Houston, Texas. She's telling Venezuelans about new deals, which. U.S. energy companies, SLB, and Hunt Oil. She also told Venezuelans, U.S. companies want to invest in Venezuela. But Bob Frickland with S&P Global Energy says the country still has a lot of work to do. Venezuela is on a sort of cautious recovery period.

He says the country has ramped up its oil production, a lot of which is getting refined in the U.S., but production is still just around 1.2 million barrels a day. It's a long ways out to get back to 2 million barrels a day. There's a lot of money that needs to go. There's a lot of work that happens. We're talking the 2030s and many billions of dollars. For now, David Goldwyn, with Goldman Global Strategies, says investments are more modest and coming from independent companies

and that the big players are watching and waiting. as the country reforms its energy sector. You just don't know if you're going to get nationalized. You don't know if your deal is going to hold. You don't know if the country is going to implode, and you don't know if the U.S. is going to reimpose sanctions. But what these companies do know is that there's no resource in the world that's quite like Venezuela's, because getting oil out of the ground there is such a sure thing.

There are not that many places in the world where you can find large, long, live resources where you don't have any geologic risk. Venezuela is that country. You know you're going to get the resources out, and you pretty much know what it costs to put them in shape to export. You just have to manage the political risk above ground. I'm Elizabeth Troval for Marketplace.

It's honestly amazing how much better stuff looks on TV, but I guess that's a whole different thing. Oh, yeah. But it's good. for recycling. Oh, yeah, no, totally. It makes a lot of sense, right? And it cut down the investment

that you guys had to make and all that stuff. It's mid-morning on a Monday in mid-August. Chris Kremma and Matthew Coe, the guys behind Knockout Shorts. It's a new Hollywood studio that's trying to change

the way you watch pretty much everything are showing me around their soundstage. Let's look around with us. So we got this kitchen thing in the... Yeah. She's the apartment.

Studio apartment. These are my babies, so I'll try not to be a sales on them. No, go ahead. You create the next trend show. What is it about having a standing set that did it for you guys? Oh, wait, there's a courtroom?

Yeah. Yeah. You can't handle the truth. So, sorry. For this, it's like, why couldn't you have, you know, like a Judge Judy in the vertical space using this courtroom, you know? Quick, two-minute small claims. Don't mean on that. It's not a solid foundation.

Whoops. Sorry, Judge Judy in the vertical space, really? Yeah, yeah, yeah, yeah. Two-minute small claims. Look, that could work. We're at the new sets, Knockout has built at Sunset Las Palmas, here in Los Angeles, sets built specifically for vertical format filming. Knockout Shorts makes micro-dramas, kind of like TV shows for your phone.

Episodes are maybe a minute and a half or two minutes long. A series runs anywhere from 50 to 80 episodes, and in the year it's been around, Knockout has produced 10 shows so far, and they're hoping to ramp our production this year, thanks to these very sets. Here's the thing about these sets, right? These are now standing sets, I understand? Yes. So why is that special and what does that say about you guys as a company?

Yeah, so just to make standing sets as simple as possible, standing sets means that this will not move. No one will take it down. It will basically live here permanently in this setup. Production designers and teams can come in. If they want to paint the walls, if they want to add stuff, that's great. But at the end of it, they have to reset it back. So basically, in theory, someone could come the next day.

They may look like traditional Hollywood sets, but standing sets are plug-in-play. they're fully furnished, rigged with lighting, everything. Crews can just come in and start shooting. So then we come into this... It's like a little maze, man. I know. It's fine. Oh, there we go.

Yeah. A little bar set. This could also be a coffee shop. Bar, coffee shop, right? Just depends on what you want to do with it. Yeah. That's something about vertical video and low-budget filmmaking in general. You want to be able to kind of like, especially vertical, because the frame's narrow.

You can make a space if you're smart about it. Whatever you want. Feels like three different. locations. Yeah, totally. Like we should shoot a scene over there and then turn the camera around and have a different location and shoot it here like he's a coffee shop or Easter. Yeah. The studio lot were on. Sunset Las Palmas had a hand in changing television history. The Lone Ranger and Mr. Ed were filmed here. The original I Love Lucy set is one stage over. And Matt and Chris are betting that microdramas could be Hollywood's next transformation.

A report out from Omdia, that's a market research firm, found that last year U.S. sales phone users spent more time watching vertical videos than they did watching Netflix or Disney Plus or Prime on their phones. What has this done for you reputation-wise? Because I'm sure, you know, in other, no offense, bigger places in Hollywood, people are saying, who the hell are these guys, man? Building Standing Sets. No, I think it further solidifies our mission from the beginning of creating premium

Hollywood-level content. And this is quite literally the convergence of Hollywood in the vertical space here on the iconic sunset loss Pomas. What does that mean? Convergence of Hollywood in the vertical space. It's as Hollywood is trying to enter the vertical space. It's very buzzword. How do you bring people to achieve better quality in this format that's growing so fast?

And in order to do that, you have to work with Hollywood. So that's what we did. Sunset Las Palmas, a very big Hollywood company. Right. We partnered with in order to bring verticals to Hollywood. You guys are confident, you're ambitious, all of which more power to you. Yeah. Not six or eight years ago.

What's his name? Jeffrey Katzenberg. Katzenberg and Meg Whitman spent like $2 billion and went zero in this space. Yeah. We haven't spent two billion. That's one. And two, I think that I don't like I think Quibi might have got a little bit unlucky as well with COVID, to be honest with you. But they were 2018, 19, right?

Yeah. Yeah, but then they launched 2019 and then COVID happens and everyone's inside, everyone's watching Netflix. Having nothing to do but watch their phones. Hello? Could have been. But I'll tell you how it started in Asia. In Asia, it started with everyone commuting to work and wanting something to watch. Microdramas are a huge business in China. Last year, microdrama revenue beat the $7.5 billion dollar Chinese movie box office. Big credit to all the Chinese companies that started it, what they realize is we need to match the model that everyone. has been watching for 10 years, which is scrollable, vertical,

no more than two or three minutes, about as much as your attention span. And Quibi, I think, was 10-minute episodes. And obviously, the budgets were much higher than the budgets we work with. So it's kind of a business about scale. Knockout has a budget of about $250,000 per series, which is, yes, peanuts in Hollywood.

But microdramas are low budget because they have to be. They don't have money coming back, until after people have watched it, and that's if they watch it at all, because it's a per view business model. Sorry, just through my brief perusal of what did you guys do last night. So, like, you get four, five, six episodes for nothing, and then you got to start paying, right?

And each of these little minute and a half, two minute things. And on something of a cliffhanger. Yeah. So, you know, I got pulled into like three. Nice. Nice. It worked. Okay.

It worked. You know. Yeah. But that's basically the business model, right? It is. The first couple are free. Right. Exactly. The first couple are free and then there's a paywall in which you have to pay for coins in order to unlock the rest of the season or buy a subscription to watch weekly.

But the model's changing as well and we're changing with the model and that's actually something that we're excited about. With TikTok entering the space, TikTok's model's totally different, it's free to watch the entire series, but it's based off ad dollars. So I think that in terms of who's able to watch verticals in the states, it's going to change. a law because you don't have to pay. It's got, that's, I mean, that's just got to be a giant pain in the butt for you guys. Right? Figuring that out? The TikTok model?

Well, the TikTok model, who pays, who doesn't, whatever, right? Yeah. The idea that it's, look, you're in an industry that's changing really quickly, but the business model of that industry is changing as you look at it. Yeah. Yeah. You know, our legal column is pretty steep. Yeah.

I bet. I bet. You know, like transparency is very important for us as an independent studio. So, you know, we've gotten to a place where we're setting the precedent on what that looks like for independent producers who want to make something, sell it to a platform who may or may not, you know, share data. Right, right, right, right. Which is, you know, a big key factor.

So, yeah, you know, it's going to evolve in many different ways. And we're here for the ride. I was just going to say, you guys are along for the ride. Yeah, yeah, yeah. Pretty exciting, no? Very exciting. Good stuff. Thanks, you guys.

Appreciate it. No, of course, of course. Do you want to see the rest of the set? Yeah, we go to more sense. Yeah, we go to this. All right, yeah. All right. You go.

Let's go. This final note on the way out today, which begins with the number 40, followed by 12 other digits. I speak here of the federal debt, which, as of the close of business last night, topped $40 trillion for the first time. $40,000, $47,000, $425,768,420. I have no idea what is up with the $22. But in all seriousness, the really interesting slash-skirts. scary part of the national debt is how fast it is piling up. See also the 10 minutes that Robin Brooks and I have spent over the past two days talking about this. Our media production team includes

Brian Allison, John Fokie, Montana Johnson, Drew Jostad, Garrow, Keith, and Charlton, Fork. Alex Simpson is the manager of media production. And I'm Kyle Rizzdahl. We will see you tomorrow, everybody. This is APF.