Money Supply is a very important indicator. It helps show how tight or loose current monetary conditions are regardless of what the Fed is doing with interest rates. Even if the Fed is tight, if Money Supply is increasing, it has an inflationary effect.

One key metric shown below is the "Wenzel" 13-week annualized money supply figure. It was made popular by the late Robert Wenzel who tracked the metric weekly as an indicator for where the economy might be headed. In 2020, the Fed started reporting the data monthly instead of weekly. It should also be noted that Money Supply data can be heavily revised in future months.

Recent Trends

Seasonally Adjusted Money Supply has been growing on a consistent monthly basis since November 2023 (27 straight months). The latest month (January) showed an increase of $76B, fairly average for recent history. The continued growth in money supply is inflation. When the money supply increases faster than productivity gains, you get price increases. In a world with a stable money supply, such as gold and silver, productivity gains will drive down prices. The Fed won't let this happen.

Figure: 1 MoM M2 Change (Seasonally Adjusted)

The increase in January was 4.1% annualized, which is slightly below the 4.3% over the past year.

Figure: 2 M2 Growth Rates

December average is typically around 5.6%, which puts the latest month somewhat below average.

Figure: 3 Average Monthly Growth Rates

Non-seasonally adjusted shows negative growth for the month of January and positive growth for February (note: this data is ahead of the seasonally adjusted data above).