If Inflation Is the Problem, Why Aren't Wages?

中文标题

如果问题是通胀，那为何工资不是？

PIMCO09/02/2026updated 10/17/2026

Citable research brief

Core conclusion · Tlines extraction

PIMCO economist Tiffany Wilding analyzes the inflation versus wage puzzle, arguing that current above-target inflation is driven by profit margins rather than labor costs. She outlines three scenarios for resolving the price/labor-cost gap, favoring the margin compression scenario over wage catch-up, and suggests the Fed should adopt a patient approach.

Institution: PIMCO
Published: 09/02/2026
Research topic: Inflation · US Inflation · Labor market and inflation
Time horizon: 3-6 months · current · 6-12 months · September 2026

US Inflation · CPI Fed Policy · FED

Key arguments

Current inflation is a profit-share story, not a labor-cost story.
Unit labor cost (ULC) growth is running at ~1% YoY, while core PCE is at 3.3%.
Labor's share of income is at its lowest level since 1947.
Three scenarios for resolving the price/labor-cost gap: wage catch-up, margin compression via slowing demand, and cost-side margin compression from rising non-labor costs.
The wage-catchup scenario is the least likely near-term.
Core inflation is expected to moderate over coming months.
The Fed should adopt a patient approach, as the labor market is not generating inflationary pressure.

Key numbers

Unit labor cost growth: ~1% YoY
Core PCE inflation: 3.3%
Labor's share of income: record low since 1947
Probability of September hike: ~60%
Cumulative tightening priced: ~60 basis points
PCE inflation forecast for end of 2027: 2.4%-2.5%

Main risks

If inflation expectations de-anchor, the Fed may need to hike despite the labor market not being the source of inflation.
The wage-catchup scenario could materialize if labor bargaining power strengthens unexpectedly, leading to labor-cost-driven inflation persistence.
Cost-side margin compression from tariffs, energy, power, chips, and depreciation could be inflationary for goods and services tied to trade and AI infrastructure in the near term.
The August CPI print could surprise to the upside, potentially altering the Fed's outlook.

Corresponding source evidence

We still expect core inflation to moderate over the coming months. The current pace of core PCE inflation is an outlier and will likely be revised down, while the labor market is not a source of inflationary pressure. · 3-6 months
Right now, the gap between ULC growth and core PCE is unusually wide. ULC growth is running at roughly a 1% year-over-year pace, near the slowest pace since the pandemic, while core PCE is running at 3.3%. · current
Profit margins are historically procyclical; they widen as demand picks up and compress when it cools, largely independent of wage trends. This is a disinflationary scenario and requires no additional tightening. · 6-12 months

Conditions / invalidation

if inflation expectations de-anchor