Fed Chair Warsh's "not overheated" judgment questioned as economy and inflation both heat up

Odaily: The latest US economic data is challenging Fed Chair Warsh's judgment that the economy is not yet overheating, as markets continue to bet on a December rate hike by the Fed, which now faces a more complex set of choices. Strong consumer spending and business investment are driving economic growth above expectations, while inflation continues to spread, leaving the Fed facing a more complicated trade-off between sustaining growth and controlling prices.

Data released by the US Department of Commerce showed that real gross domestic product (GDP) grew at an annualized quarter-over-quarter rate of 3.4% in the third quarter, exceeding market expectations. Consumer spending rose 3.8% over the same period, while business equipment investment surged 20.9%. Just one day before the data was released, Warsh said he did not believe the US economy was overheating and did not want to hinder economic expansion through excessively tight monetary policy. But the latest data indicates that even as markets expect the Fed to continue raising rates, US economic activity has yet to show significant signs of slowing.