PIMCO economist Tiffany Wilding said labor markets are no longer a major source of inflation pressure, pointing to broad measures of nominal wage inflation that have been decelerating. She argued that AI, demographic shifts, aging, and retirements are changing labor dynamics and keeping wage pressures modest. Wilding also said that when wages are adjusted for productivity, unit labor costs are not accelerating, meaning companies are not facing rising marginal labor costs. While other input costs such as energy may still be moving higher, she said labor cost inflation is clearly coming down from 2022 levels. With labor making up about 75% of input costs for many U.S. companies, Wilding said this gives Federal Reserve officials room to remain patient and continue hiking only gradually.
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