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

• Nominal wage inflation is decelerating, and unit labor costs (wages adjusted for productivity) are not accelerating.
• AI and demographic shifts are contributing to modest wage pressures in the labor market.
• These factors provide the Federal Reserve with room to be patient and view current rate hikes as risk management, rather than aggressive tightening.

PIMCO economist Tiffany Wilding suggests that decelerating nominal wage inflation and non-accelerating unit labor costs, influenced by AI and demographics, allow the Federal Reserve to be more patient with rate hikes. She views current hikes as risk management, contrasting the current environment with the tighter labor markets of 2022.