The recent jobs number in the United States was a morale booster, at 271,000 for the month of October. Compared to past months, it seems the Recovery is picking up momentum. And to remember that it is well before Christmas, these were not mostly seasonal jobs, those are still to come.
However, if the monthly moving average of jobs created was to rise above 250,000 that would create joy, but also it would be a sign of solid growth and may translate into increased consumer expenditure, resulting in a healthy core inflation figure. But it seems it will take a few more months of solid growth for such figures to register, and hence I don't think Dr Yellen would be announcing a rate hike just yet. Of course, she could pull out some figures from the matrix she uses and is privy to, and justify a rate hike. That's what keeps us all guessing.
Just from my guestimate of the momentum and likely core inflation, I would bet that the Fed will not increase the rate until, at the very earliest, February-March 2016.
In the meantime, on 11th December it will again seem as if the nation may have run out of funds. Secretary of State Jack Lew will likely say a few words on the subject, in his usual quiet dignified style. The fact remains they need to fix the Debt Ceiling; If they fix it for a whole year, that will save all the senators and the President running about at holiday or Christmas or in the cold months. It is a recurring issue, and fixing it well for a year will keep the nation warm and happy. Doesn't everyone want that?
Here in England the whole idea seems a damp squib, and financing and growth can continue at record low rates of borrowing. Whether funds are available to all to borrow is another matter. If local bank managers sound out the local business communities and do a fact find, I would suggest they may find a lot of people willing and wishing to borrow - provided the rate offered is keen. I can see a lot of old buildings being torn down and new ones being built there, in virtually every spot in and around the towns. When the buildings are ready, you can imagine people filling them up, new communities being formed, with needs for supermarkets, restaurants, schools, doctors surgeries, etc, and an increased demand on buses. There seem to be signs of unprecedented growth for Great Britain in the near term, it seems a busy place even at weekends and evenings. There seem a lot of nursery schools ready to welcome kids, but there seems a shortage of trained and qualified nursery school teachers. Perhaps the government should authorise a fast-track system of training and recruitment, and, with the vouchers they are making available to parents to cover the cost of schooling, the nursery schools should be opened. They are certainly likely to do well.
For the Japanese economy, I would suggest it is time for them to taper. The Stimulus seems considerably bigger than their needs, and will have the contrary effect. Instead of utilisation and growth, it seems to be creating deflation and redundant capital. In the long term, it will weigh the nation down, and is pretty unnecessary. The time has come to taper it, I would respectfully suggest.
The policy committee at the Reserve Bank of India may be confounded by the conundrum : Do they reduce the benchmark rate further? Will capital not flee the markets? Will people have the guts to borrow more if it is cheaper? Why let the people suffer a drop in interest income? Such a medley of considerations must keep some of them amused or awake at night, giving them the opportunity of not making a decision. I would say to them : the growth will quicken if the rate is cut, the sooner, the better. People who rely on investment income may see some small drop in their incomes, but you should not allow the majority to suffer not being able to borrow. Cutting the rate will be good for the banks' turnovers, and will create a prosperity in the nation. Compared to half a percent or less in the advanced economies, 6.75 seems way too high. I feel sure in the policy of convergence, the IMF would suggest India should cut the rate.
Once the world sees corrective measures being announced by policymakers and legislators on the above matters, I believe we'll be able to see the continued good times becoming even better.