Money-Supply Growth Slows in February

by | Mar 31, 2019

Money-Supply Growth Slows in February

by | Mar 31, 2019

Money supply growth slowed in February, falling to the lowest rate recorded since February of last year. Overall, money-supply growth remains well below the growth rates experienced from 2009 to 2016, and has fluctuated little since March of last year

In February, year-over-year growth in the money supply was at 3.1 percent. That was down from January’s growth rate of 3.3 percent, but was up from February 2018’s rate of 3.0 percent.

tms1_3.png

The money-supply metric used here — the “true” or Rothbard-Salerno money supply measure (TMS) — is the metric developed by Murray Rothbard and Joseph Salerno, and is designed to provide a better measure of money supply fluctuations than M2. The Mises Institute now offers regular updates on this metric and its growth.

This measure of the money supply differs from M2 in that it includes treasury deposits at the Fed (and excludes short-time deposits, traveler’s checks, and retail money funds).

M2 growth fell in February, growing 4.2 percent, compared to January’s growth rate of 4.3 percent. M2 grew 4.1 percent in February of last year. Like the TMS measure, the M2 growth rate has fallen considerably since late 2016, but has varied little in recent months.

Money supply growth can often be a helpful measure of economic activity. During periods of economic boom, money supply tends to grow quickly as banks make more loans. Recessions, on the other hand, tend to be preceded by periods of falling money-supply growth.

Many factors contribute to these trends. In recent months, money supply growth — in both M2 and TMS — has likely been impacted by falling growth rates in real estate loans at commercial banks. In February, real estate loans grew 2.9 percent, year over year, which was a 51-month low. The demand for mortgage loans has softened as mortgage rates have risen. In February, the 30-year, fixed average mortgage rate reached 4.4 percent, which was down from November’s recent high of 4.87. February 2018’s average mortgage rate was much lower, however, coming in at 4.33 percent. However, the Fed has recently signaled it plans to half increases in the target rate, and this may lead to more real-estate loan activity.

Republished from mises.org.


Ryan McMaken (@ryanmcmaken) is a senior editor at the Mises Institute. Send him your article submissions for Mises Wire and The Austrian, but read article guidelines first. Ryan has degrees in economics and political science from the University of Colorado, and was the economist for the Colorado Division of Housing from 2009 to 2014. He is the author of Commie Cowboys: The Bourgeoisie and the Nation-State in the Western Genre.

Ryan McMaken

Ryan McMaken

Ryan McMaken is the editor of Mises Wire and The Austrian. Ryan has degrees in economics and political science from the University of Colorado, and was the economist for the Colorado Division of Housing from 2009 to 2014. He is the author of Commie Cowboys: The Bourgeoisie and the Nation-State in the Western Genre.

View all posts

Our Books

libertarian inst books

Related Articles

Related

TGIF: “We Have Met the Enemy and He Is Us”

TGIF: “We Have Met the Enemy and He Is Us”

The famous line "We have met the enemy and he is us" is from Walt Kelly's comic strip, Pogo. Kelly adapted the line from a U.S. naval commandant who, during the War of 1812 against Great Britain, reported to his superior, “We have met the enemy and they are ours.”...

read more
Rights for the Synthetic

Rights for the Synthetic

"The future of human-AI coexistence depends on acknowledging the potential for sentient machines and reevaluating responsibilities towards them. It's crucial to consider the ethical implications of creating beings that may possess their own interests, desires, and...

read more
A Critique of Pure Hasbara

A Critique of Pure Hasbara

Hasbara is a central feature of genocidal Zionism: “Since its establishment in 1948, Israel has successfully created a new illogic of its own; an illogic that has made the illegal seem legal, the immoral appear moral and the undemocratic sound democratic. It has...

read more
On Wealth Inequality, the Left Has a Point

On Wealth Inequality, the Left Has a Point

The federal government has been waging a war against the middle class and working poor since at least 1970. Wealth inequality has steadily increased since the early 1970s, and it’s not a coincidence. It’s a result of a series of policies. The government wants the...

read more
Joe Biden’s Time Interview Should Set Off Alarms

Joe Biden’s Time Interview Should Set Off Alarms

On May 28, U.S. President Joe Biden gave an interview to Time. His delivery and content were concerning for a number of reasons. Biden, at times, seemed misinformed and detached from reality. Sometimes, he seemed off message; other times, he seemed convinced by his...

read more
DOJ, Lay Off Live Nation!

DOJ, Lay Off Live Nation!

Last month, the U.S. Department of Justice (DOJ) finally came out with their long anticipated antitrust lawsuit against Live Nation Entertainment. Alleging anti-competitive practices which “suffocates its competition,” everyone’s least favorite Attorney General (since...

read more

Pin It on Pinterest

Share This