MAIA: Tiffany Wilding Says Labor Costs Are Easing, Supporting Fed Patience, ft. Tiffany Wilding

Summary

PIMCO economist Tiffany Wilding discusses the Fed's likely path, arguing labor markets are no longer a major inflation source. She says nominal wage inflation is decelerating due to AI and demographic shifts, and unit labor costs are not accelerating. Because labor is a large share of corporate input costs, she sees room for Fed patience, though gradual hikes remain likely.

• Tiffany Wilding of PIMCO says labor markets are no longer a major inflation pressure.
• Broad nominal wage inflation measures have been decelerating.
• AI, aging, and retirements are changing labor dynamics and keeping wage pressures modest.
• Unit labor costs are not accelerating, so companies face no rising marginal labor cost.
• Other non-labor costs such as energy may still be rising.
• She expects the Fed to hike gradually as a risk-management move.
• The market is pricing roughly 75 basis points of cumulative hikes, which she views as reasonable.
• She does not see a 2022-style inflation environment.