Marketplace - Steep inflation, meet slow wage growth

Episode Date: August 12, 2026

The average household’s buying power has slipped by about 0.1%, when the latest CPI report is compared to last week’s jobs numbers. In layman’s terms, Americans took a pay cut over the last year. But economists aren’t so clear on what comes next. In this episode, we’re on the inflation-outpacing-wages beat. Plus: Drivers brace for continued high gas prices, fractional homeownership startups present tradeoffs in this squeezed housing market, and we break down some lesser-known economic indicators.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.

On the program today, data and history. Doesn't get any better than that now, does it? From American public media, this is Marketflats. In Los Angeles, I'm Kyle Rizzdahl. It is Wednesday. Today, this one is the 12th of August. Good as it always is, to have you along, everybody. We have arrived at the point in this week where we have some data to chew on.

And in a lot of ways, the news from this morning, was pretty good. Inflation, of course, is the data du jour. Year on year, the headline consumer price index rose 3.4 percent. Core, that is, less food and energy, as you know, up two and a half percent. Both, yes, higher than the Federal Reserve want them to be, but also both a slight slowdown from last month's reading, which is good. What is not good is that when you stack today's inflation report, up against the most recent wage data we've got, you notice pretty quickly that prices have been going up faster than pay has been going up over the past year. Real wages is the phrase you're looking for. And as marketplaces Kaylee Wells reports to get us

going, them not keeping up is not great. The reactions from analysts are kind of all over the place today. In one faction, things could be worse, says Connell Thullen Camp. He's an economics professor at Duke University. The economy seems like it's on kind of cruise control. Everything's kind of working, maybe not wonderfully, but it's still kind of chugging along. Unemployment isn't terrible. Energy prices are elevated but stable. And he says a main driver of this cruise control economy is that people just keep spending.

There's still enough people in the economy who are doing well enough, who don't feel like they have to give up the habits that they've become accustomed to in terms of consumption. and they're enough of them to keep spending to keep the prices marching up. Then there's the more pessimistic view. Inflation is still higher than wage growth. The cost of living is rising at a pace that feels genuinely uncomfortable. Justin Wolfers teaches economics and public policy at the University of Michigan. And he says the numbers today didn't reveal any major new problems,

but that just means it's more of the same bad news. Prices are rising and wages aren't keeping up. And so therefore the amount of stuff you can buy with your paycheck has literally fallen over the past year. That's not the way things are meant to be. So life's more expensive and people are still spending money, which is only possible. Because everybody's spending every dollar that they have. Gary Brod is founder of a research and advisory firm called Deep Knowledge Investing. Credit card debt is up, savings is down, which is why Brod says the vibe check from businesses, think the stock market

setting records, and the one from consumers look totally different. Wall Street was celebrating how great, you know, it's less likely that the Fed will raise rates, which technically is true. I think for an average person, this is a bad prince. Brod says life isn't going to feel any less expensive anytime soon, and more reports like this one are likely on the way. So the only way consumers can make the spending feel less bad is to do less of it. I'm Kaylee Wells for Marketplace.

Wall Street today. almost nothing traders like better than an understated consumer price index. Not, of course, because that means consumers won't be paying quite as much, but because, as you were heard in that piece from the guy that Kaylee talked to, it means Chairman Warsh and the gang can now safely not raise rates at their next meeting. All of that, the caveat, of course, is for now. We will have the details when we do the numbers. If you go to table two in this morning CPI report and scroll on down to the line that says fresh vegetables, you will see those prices were down more than 2.5% month on month,

up, though, more than 6% for the year. Now, the CPI is just one economic indicator among many. So today and for the next couple of weeks, we're going to be looking at some others, ones you might not be so familiar with. For our first go, we're going to stick with the general theme of vegetables. The Department of Agriculture puts out something called, called the World Agricultural Supply and Demand Estimates.

They do it every month, and just like it sounds, its best guesses at supply and demand for a bunch of crops, wheat, rice, eggs, milk as well. The August report came out today, and we called up an interested party. My name is Felipe Villays. I am an assistant professor of agricultural economics at UC Davis, and I use the Wazi report basically every week.

I look for its data. I look for its updates every month. So Wazi stands for World Agricultural Supply and Demand estimates. It's essentially a balance sheet for a bunch of different agricultural commodities. The report measures, for example, how large corn crop is going to be this year by measuring its acreage and its yields. It measures also its demand and where and how that product is going to be consumed. So people are really expecting to see, we're really anxious to see the yield numbers that the USDA was going to put out for corn and soybeans. There was an expectation that these numbers

would be revised down, and that's a little bit of what happened. Especially core numbers were revised down. It's been a tough weather year in some parts of the Midwest, so that was kind of what the market was expecting. I love it. I'm a huge fan. I think the best thing about the was is that first the data is super reliable, and it's super good.

My first internship ever, the interns were responsible for compiling was the information, so that's how I first got introduced to it. we basically had to print it at the time and carry it around the company. And that's how basically I got introduced to this whole world of agriculture economics. I would say that 80% of my research uses some sort of WASD data. So for example, right now I'm collecting data on corn and soybean oil markets. If I had to collect every single data point from all across the world,

it would be a really painful job to do. So what the WASI does, what the USDA provides us with this report is fantastic. There is data everywhere. Philippe Bavales, once an intern, now a professor of agricultural economics at the University of California Davis. Crude oil prices, as we know, are still elevated, even if they're off the recent highs. It is distillates, though. All that stuff downstream of the refinery that hit the global economy where it hurts. And some new analysis from S&P Global Energy says a supply squeeze right there is hitting hard.

Marketplace is Elizabeth Troval has more on that one. Even before attacks on Iran earlier this year, the world wasn't exactly overflowing with refining capacity. Dan Evans is with S&P Global Energy. The market was sort of structurally tight because what we'd seen was that refineries had shut down. They'd shut down in the U.S., that's inclosures in Europe as well. And yet demand was still growing. That tightness made the refined products market sensitive to disruptions. And we've had some big ones.

The closure of the Strait of Hormuz. Ukrainian strikes on Russian refining infrastructure. Which has reduced Russia's ability to export products. And we've seen them ban exports of diesel. And also the constraints that China is placing on product exports as well. The crude oil market, on the other hand, is feeling less pressure. Gregory Brew with Eurasia Group says, for one, there's a sense that the U.S. has backed away from escalation in Iraq. The other factor is the fact that Hormuz is not completely close.

Available data suggests that a reasonable amount of crude is getting out of the strait. But most consumers, businesses, and producers don't buy crude oil. They buy jet fuel, gasoline, or diesel. Even if we see de-escalation in the Middle East and crude prices falling, relative to that, product prices are probably going to remain high. Susan Bell, analyst with Brystad Energy, also believes higher prices. are here for a while. Gasoline might weaken a little bit just because of seasonality, but we do expect all of those key products to be very strong into the fall.

And those elevated prices are not great for strong GDP growth globally. Because of the inflationary pressures. And consumers will fill the pinch. They'll have to spend more money on the gasoline that they need to buy to get their kids to and from school and to get to and from work. which means less money to spend on other stuff. I'm Elizabeth Troval for Marketplace. It is a well-established fact that this program believes history matters. So with that as the frame, I offer two apparently contradictory facts. Fact number one, the major American stock indices are at or near record highs.

Fact number two, we are at war with Iran, and the Strait of Hormuz is still effectively closed. So happy markets amidst something of an economic crisis. Make that make sense, right? Well, that's exactly what a Bloomberg column last week by John Authors did. Comparing markets today with what happened after the Munich Agreement of 1938. Peace in our time, Neville Chamberlain, all of that. John Authors, welcome to the program. It's good to have you on.

It's a great to be here. Thank you for having me. I will cut to the chase here, and then we'll get into the details. But we are at war, and somehow investors are, are happy? How does that happen? I think there's an element of a learned response, and there is also an element of markets hate uncertainty, but they can actually deal with bad news per se. So if you were in a situation where you weren't sure whether there was going to be a really major escalation, there was going to be military strikes across the Gulf, permanently removing refineries, reducing

the total supply of oil for a matter of years. If people thought there was a serious chance of that, then we would be in a very different situation. The judgment that is being made on markets is that this isn't great. In fact, it's pretty bad, but it's dealable with. And now that we've got our arms around the scale of the problem, we can ignore it. I'm not saying that's right, but that's definitely what's happening. there is a historical reference here that you make in this piece, which I mean, this column was right up my alley. I loved it. 1938 Munich, of course. And then the riff on that is not peace in our time, but oil in our time. I mean, that's where we are, right? Yes. And to some extent,

it looks as though we're going to have some kind of a messy deal whereby people can use the straight of Hormuz, but they are going to have to pay protection money is basically what it is, isn't it? But they're going to have to pay some kind of a toll, and it will make the costs of doing business that much higher and make profits that much less, but basically life will go on. If you want to compare that to Munich, fascinating thing, if you look at the Tao, you would have thought Munich was one of the best things that ever happened, not because people would particularly really believed Neville Chamberlain that it was peace in our time, but it was peace for a while, no risk of a war right then and there, and uncertainty resolved. It wasn't great. Hitler got what

he wanted, it wasn't great, but the worst scenarios were averted for the time being. Yet another indicator is if we needed it, that really markets only care about what's right in front of their face. Just go beyond the tip of your nose and they don't care. Yes, precisely. There is a great flowchart, if you will, that you talk about in this piece. And it's an analyst at Fordham Global Insider. Her name is Tina Fordham. And she says this is the way it's going to go, right? Iran and Oman will agree on some kind of deal.

Trump will object loudly. Everybody else will comply quietly. And then there will be periodic threats. It's a little bit like the old shampoo commercial, lather rinse, repeat. Yes, exactly. And I think one other parallel that people don't talk about is Putin takes. Crimea over a decade ago, then you get the very ugly ongoing war in Donbass. It just carries on grumbling away at a low level, no great risk of escalating. And another geopolitical analyst colleague

of Tina Fordham's Marco Pappich said, what happens in Donbass stays in Donbass? And that's likely where the market thinks we're heading with Hormuz. There's a great phrase. There's a great phrase. in this piece that I hadn't heard honestly since I was in graduate school, the Iranians will likely try to salami tactic this thing until the midterms. Explain what that means, would you? No, they'll just keep slicing another little piece off the salami, getting another little edge of advantage from somewhere, knowing that Donald Trump, he really doesn't want to escalate before the midterms.

They know that they can see that so they can continue. you chipping away, they just need to avoid taking the entire sausage straight away. That that might force some degree of response sending in special forces or Marines to actually take Kahlig Island or something. And if that's not at stake, they can get away with taking another slice of salami. The price of enabling a dictatorial regime, you say, is steep but payable. And while on the face of it, and in this moment, that seems to be true. That can't really be the long-run answer here, can it? Interesting question. Munich certainly gives you a huge argument against letting Hitler get away with taking part of Czechoslovakian was merely a prelude telling him that he

could take the rest of it, and then he could try to take Poland. I guess the argument against that is the Cold War. The Iron Curtain. went up and we had a way less than ideal situation in which, you know, however many hundreds of millions of people lived under a fairly unpleasant version of communism for 45 years. But it was stable. Life went on. We've had Iran behaving the way it does for, when was it, 79, coming up for 50 years now. It's not great. It's particularly not great. It's particularly not great for the poor people who live in Iran. Let's not forget them. But there's a kind of analogy between the way the US has lived with Iran for the last 50 years and the way the US lived with

the Soviet Union for the first 50 years after the Second World War. It's not great, but it's livable with and capitalists can get on with being capitalists in the chunk of the world that is left of them. I'm not saying it's good. I'm not saying I particularly like it. I am telling you I can understand why markets are behaving the way they are. Right, right. John Authors, he's a columnist at Bloomberg Opinion. You should read him every single day. I learn something every time.

John, thank you so much for your time. I really appreciate it. Thank you. Cheers. Coming up. People still do buy CDs and cassettes that have books on them. Well, that's relief, huh? First, though, let's do the numbers.

Down industrial's down, 21 points. flat, 53,770. The NASDAQ increased to 143 points, more than 5 tenths percent. Finished at 26,58. S&P 500, up 20 points, 2 tenths percent, 7448. Other price changes in today's inflation report, gas, of more than 24 percent year-on-year clothing, up almost 4 percent. New vehicles. Up about a half percent. Use cars and trucks, though, down nearly 2 percent. Chevron. Shares were flat. Shell shares, Say that. Ten times fast. Shell share, shell, shell, show, seers. See? Dipped almost five, tenths percent. Half percent is another way to say that. You're listening to Marketplace. This is Marketplace. I'm Kai Risdahl. The trials and tribulations of would-be home buyers in this economy are well known. High prices, high rates, low supply. What if, though, there was a less daunting option than having to buy a whole house? Well, problem meets solution. There's a new breed of real estate start. offering would-be buyers a way to get a foot in the proverbial door by buying a share of a property, fractional homeownership, it's called.

As Marketplace's Amy Scott reports, there are different models of that idea, and there are different trade-offs, too. Eddie Hanline and his wife bought their first house in Durham, North Carolina in 2020, back when mortgage interest rates were super low. Then, as the years passed, with their family growing, along with two small businesses, they'd started, they realized they needed more space, but the market had changed. With the increase in the interest rates and having, you know, such a good interest rate on our current house, it was a tough sell.

That's when they found out about a company called Acre Homes that would buy a house on their behalf in cash. They found a bigger place in a suburb of Raleigh. Handline put 5% down and makes a monthly payment to Acre, comparable to what he would have paid for a mortgage, but he saved about $100,000 in upfront costs. Money, he could instead invest in advertising, staff, and software for his business. You know, investing in all of those things would have taken a backseat to qualifying for a mortgage. At the end of three years, they can buy Aker out, renew for another term, or walk away with 50% of any appreciation in the home's value. Aker's co-founder and C-O, Pete Crock,

Crawford says it's a way to build some wealth, if home values go up, without all the costs of home ownership, and less of the risk if prices fall. They don't have any transaction costs. The major maintenance of the home is on us, and they have this option to purchase the home later or to walk away. And in either case, they get to participate in that appreciation. So far, Acre Homes is just available in the Carolinas and Georgia, but it's one of a handful of startups offering a form of fractional home. ownership. With Jubilee homes, customers can buy a house but rent the underlying land. Founder and CEO Brian Elbogan says the model is a new twist on an old idea. Land leases are common in Hawaii and Baltimore and in mobile home parks, and many people already pool their resources with others to buy a stake in the American dream. About 20% of people today go buy a property with someone that's

not their immediate spouse. It could be a family member. It could be a friend. It could be an investor. Jubilee homes started operating in California earlier this year and has since expanded to Colorado, Texas, Florida, and seven other states. Customers get a 99-year lease on the land. The rent goes up 3% a year after an agreed-upon term. They have the option to buy Jubilee out at any time. And if they decide to sell instead, they share the appreciation. or loss, if the price falls, based on the original split. If we bought 60%, and you brought 40, you would own 40% of the total appreciation. If it was 60, 40 the other way, you'd get 60% so that we are winning and losing together.

Customers can paint the walls, build an addition, do whatever they want with the property. They also bear most of the cost, property taxes, insurance, maintenance. Jenny Schutz is a housing economist at Arnold Ventures, a national affiliate. philanthropic organization. She says tradeoffs like these are one reason fractional ownership hasn't really taken off. The versions of this that have been floating around for a long time, and I think part of the problem is when people buy a house, they want all of the upside. And while shared ownership can offer people otherwise locked out of the market a way in, she says it's important for buyers to understand what they're giving up.

Particularly for people who aren't financially sophisticated or who feel like this is really their only option. But for some, the tradeoffs may be worth it. Two years into his arrangement with acre homes, with interest rates still high, Eddie Hanline says he's leaning towards renewing for another year or two. I'm Amy Scott for Marketplace. We started with data. Data is where we shall end. Back to table two of the CPI report. There's a line that says recreational books. Prices up just about 5% month on month, down, though, more than 1% year on year. I'm Sarita Swan. I'm the Chief Operating Officer for the Association of American Publishers, and we issue Statshop

monthly, which is a revenue report that provides a snapshot of the U.S. publishing industry. What we do is, on a monthly basis, we send out the questionnaire. The publishers are given a deadline by which to return the questionnaire. then the data is aggregated into a report. And the report goes over a few categories, digital audio, e-books, hardback audio, which people still do by CDs and cassettes that have books on them. And also special bindings, which is basically those children's books that we all had that were waterproof or had fur on them.

Our most recent report was from May 26th. the report shows that revenue for U.S. publishing industry is up 2.6% as compared to May 2025. My favorite part of the report is actually looking at the formats. There's always a lot of conversation in news about the formats, be it digital versus paper or printed formats. Over 50% of the industry is always printed regardless of what month it is. I think there's something to be said about having the physical book in your hand reading instead of reading through a screen when we spend so much time on screens anyway. I raised my daughter to be a printed book reader.

She goes to the library, reads the book, then buys the book to put in her own personal library. And I think we all need more physical connection to things outside of being connected through technology all the time. Amen to that. Serita Swan, C-O of the Association of American Publishers right there. This final note on the way out today in which we turn to today's treasury auction. The government sold more debt today as it does regularly since we regularly outspend our means. That is not the news. The news is that the yield on the sale of 10-year treasuries today, arguably the most important bond in the world, the yield, the interest rate, was 4.68%.

That's the highest it's been at sale since 2007. and with apologies to the Federal Reserve, the bond market has very clear thoughts about where interest rates ought to be going. Our media production team includes Brian Allison, John Fokie, Montana Johnson, Drew Johnstead, Gary O'Keefe, and Charlton Thorpe, Alex Simpson is the manager of media production. I'm Kai Risdahl. We will see you tomorrow, everybody.

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