So will the U.S. Fed begin to raise rates at their next meeting, December 2015 with Canada following soon after? The Fed is not answering the question but is leaving room to wiggle: "The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run." (FOMC Oct 28, 2015)
Hello Japanada. I think what has to happen before rates rise is that inflation has to show up in wages alongside of higher employment rates and then we will see the general CPI overtaking the target mandate (2%-ish). Look again at the top chart comparing Canada, the U.S. and Japan... the 3 plots are similar rising and falling in concert and the question is, will the U.S. GDP start going negative. There is a good chance of it because the USD continues to strengthen against other currencies and the net trade deficit year to date increased 3.9% Y/Y as exports decreased 3.8% and imports decreased 2.4%. (US BEA, Nov 4, 2015).
Meanwhile in Canada average earnings are under pressure. (my Earnings & Employment page)... and credit creation is stalled.
The chart above are the Canadian 90+ days delinquency rates. Trouble spots continue to be auto loans and credit cards. The average auto loan climbed 2.87 per cent from a year ago to $19,649 while the average credit card debt was up 3.04 per cent to $3,745.
I did a back of the napkin ownership cost on a mid range vehicle ($49,000 plus taxes, fees and documentation of $6,500) financed with 10% down and only 2% financing over 3 years. That $49,000 car ends up costing close to $60,000 by the end of the third year and has depreciated by 50% to be worth only $30,000. If the car is sold in month 37, the cost that the consumer has paid is approximately $833 per month to drive a new car for 3 years without even adding in maintenance ($100/mo?), insurance ($100/mo?), parking ($100/mo?) repairs ($?) or disposal cost ($?) of the vehicle.
I belong to Vancouver's best and biggest car sharing non-profit society MODO and my cost for having access to over 400 vehicles as well as using taxi's and public transport is less than $150/month for two people.
History, Charts & Curated Readings
"Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement; and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it." George Santayana Vol. I, Reason in Common Sense
"History, real solemn history, I cannot be interested in.... I read it a little as a duty; but it tells me nothing that does not either vex or weary me. The quarrels of popes and kings, with wars and pestilences in every page; the men all so good for nothing, and hardly any women at all - it is very tiresome." Jane Austen spoken by Catherine Morland in 'Northanger Abbey'