No, I think the squirrel is OK. It may just be his diet. You should not be just feeding peanuts. Squirrels have a problem around residential areas. A diet like that can make them fat and lazy. You need to provide some variety to his food. Add sunflower, suet and some other nut varieties. Also make the food harder to get, so that he gets some exercise. Look at Dennis's Squirrel, lean, active. This squirrel wants a watch.
Now look at your squirrel, fat and sedentary, has his own furniture. Make these changes and I guarantee you will have a new watch in 3 months.
Here is an example of a squirrel like yours, when properly fed.
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