What's Happening with the U.S. Money Supply (and What Does it Mean)?

April 11, 2024

When financial professionals like me start digging into the tools we use to assess financial market valuations, one thing that catches our eye is the U.S. money supply. We look closely at measures like M1 and M2— basically the rock stars of the money supply world. M1 is all about cold, hard cash and those quick-to-access funds, while M2 includes M1 as well as savings and money market accounts.

Lately, there's been a drop in the M2 money supply that hasn't been seen since the Great Depression, and that's caught the attention of some in the financial community. Sure, this recent dip in the M2 money supply may be nothing more than a return to normal after a wild ride during the COVID-19 era.1

Now, even though there's a lot of uncertainty swirling around, it's important for investors to keep their eyes on the long game and remember how resilient the U.S. economy has been over time.

So, as we navigate the twists and turns of the financial world, it's good to keep in mind that time can be a real friend to investors. Even when things get bumpy, sticking to those long-term goals and having faith in the U.S. economy can help investors like you stay steady in the face of market ups and downs.

1. Yahoo! Finance, April 7, 2024 “U.S. Money Supply Is Doing Something No One Has Witnessed Since the Great Depression, and It Foreshadows a Big Move to Come in Stocks”

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.