M2 Money Supply Growth (YoY)
M2 is the broadest standard measure of money in the U.S. economy. Its year-over-year growth rate is the simplest read on whether liquidity is expanding or contracting.
History
What M2 measures
["M2 is the Federal Reserve's broad money aggregate: currency in circulation, demand deposits, savings deposits, small time deposits and retail money market funds. It is a stock, reported monthly in the H.6 release, and it is revised as bank and fund data come in.
", 'Because it measures the liability side of the banking system rather than economic activity, M2 is not a spending indicator on its own. Households can hold more money and spend less, or the reverse. What it does capture is the direction of the liquidity backdrop that asset prices are priced against.
']Why year over year, not month over month
['Monthly changes are dominated by seasonality — tax dates, year-end balance sheet effects and holiday currency demand. Comparing with the same month a year earlier removes most of that and leaves the trend, and it makes decades comparable, which is what the percentile column relies on.
', 'The trade-off is lag. A year-over-year rate turns slowly, so it confirms a regime rather than calling a turn.
']The 2020–2023 episode
["M2 growth peaked near 27% year over year in early 2021, the fastest pace in the series' history, as fiscal transfers and quantitative easing landed in bank deposits at the same time. It then fell through zero in late 2022 and stayed negative into 2023 — the first sustained contraction since the modern series began in 1959.
", 'That round trip is why the long history matters. A reading of +5% means something very different in a period whose median is around +6.5% than it did in 2021, when anything below +10% looked like tightening.
']How we calculate it
["We take M2SL (M2, seasonally adjusted, monthly) from FRED and divide each month by the same month one year earlier, then subtract one. The first twelve months are dropped because there is no year-ago comparison. The percentile is the share of monthly observations since January 1960 below today's rate.
", 'The series is nominal — not deflated by CPI or GDP — so a high reading can reflect inflation rather than real liquidity growth.
']Distribution since 1960
Each row is the share of historical observations at or below that level. A reading in the 90th percentile is higher than nine tenths of the record.
Important
Not investment advice. This page is published for information and education only. It is not a recommendation, solicitation, or offer to buy or sell any security. Market data may be delayed, incomplete, or revised. Indicators describe the past; they do not forecast returns. Past performance does not guarantee future results. Do your own research or consult a licensed financial professional before acting on anything you read here.
Questions
Is M2 still a useful indicator after 2020?
Its relationship with nominal GDP and asset prices has been less stable since the pandemic, partly because deposit definitions shifted as rates rose. It remains a reasonable read on the direction of liquidity, but not a standalone signal.
Why is the data monthly?
The Federal Reserve publishes M2 monthly in the H.6 release, usually in the fourth week of the following month. There is no official daily equivalent.
Does M2 growth predict stock returns?
Not reliably, and not at short horizons. Studies find a weak relationship with inflation and nominal activity over long windows, nothing that supports market timing.
Why is the latest stretch of the chart locked?
The current reading and the full record back to 1959 are free. The most recent months are reserved for members, along with overlays and alerts.