US: Regional Fed heads increasingly worried about overheating economy - Nomura

Richard Koo, Chief Economist at Nomura, suggests that the recent strength in the official US jobs report has helped stoke their concerns.

Key Quotes

“Interestingly, San Francisco Fed President Williams has argued that with the US now approaching full employment, job gains in excess of 80,000 will lead the economy to overheat.

This is far less than the figure of 150,000–200,000 that was typically cited in the past. Each of the regional Fed branches has its own research division, and the numbers cited by Mr. Williams do not necessarily represent an overall consensus at the Fed. If his view were to become the consensus, however, we would probably see quick calls for an early rate hike.

Atlanta Fed President Lockhart is recommending a rate increase based on the fact that while Q2 GDP was rather weak, real final sales, a measure of final demand, grew at a healthy annualized rate of 2.4%.”