FED: Gov Waller: Payrolls Overstated By 50-60k/Month; Fed 50-100bp Above Neutral

Gov Waller unsurprisingly remains concerned about the labor market following the latest nonfarms release in a Q&A at the Yale CEO Summit in New York, referring also to Chair Powell's estimate that NFPs are overstated by about 60k/month in making the case for further cuts:

• "The jobs numbers are around 50 to 60,000 the last couple months on average - we know that that's too high, and those are most more likely to get revised down when we get the Unemployment Insurance administrative data later. It'll take a while before we get that, but Board staff is estimating, take off another 50 or 60,000 jobs. So we're close to zero job growth now that's that's not a healthy labor market."
• "My focus as a governor has just been to focus on the labor market. Inflation I'm not particularly worried about - I know it's above target, but I believe it'll start coming down the next few, three to four months...There's no forces that are suggesting that inflation is going to take off again in 2026."
• Waller says he's below the FOMC 2026 rate dot median (of 3.4%) at "about three", saying "maybe we're 50 to 100 basis points off of neutral. We still got some room." But "We're not seeing a dramatic decline of labor market going off a cliff...I don't think we have to do anything dramatic. If you have to do something dramatic, it's too late."
• There were 8 (of 19 total) dots below the median in the December projections, with 4 at 3.1% and 2 at 2.9%.