M2 Money Supply — Historical Chart
M2SLM2 money supply includes cash, checking, savings, and money market funds. Rapid M2 growth (like 2020–2021's 25%+ surge) is historically a leading indicator of inflation with a 12–18 month lag.
Related — Monetary Policy & Interest Rates
SOURCE: FEDERAL RESERVE ECONOMIC DATA (FRED) · 0 OBSERVATIONS
M2 money supply is the broad measure of money in the US economy, including cash, checking deposits, savings accounts, and money market funds. The Fed's COVID-era M2 expansion of 40%+ in 2020-2021 — the largest in modern history — is widely cited as a primary driver of the subsequent inflation surge.
Related Economic Indicators
Frequently Asked Questions
- What is M2?
- M2 is a broad measure of the money supply including: M1 (cash and checking deposits) plus savings deposits, small-denomination time deposits (CDs), and retail money market fund shares. It represents the total readily accessible money in the economy.
- How does M2 growth cause inflation?
- Milton Friedman's monetarist theory holds that "inflation is always and everywhere a monetary phenomenon." When M2 grows faster than economic output, there is more money chasing the same goods — causing prices to rise. The 2020-2021 M2 surge was followed by the highest CPI since the 1980s.
- When was the last time M2 declined?
- M2 declined year-over-year for the first time since the 1930s in 2022-2023, when the Fed rapidly raised rates after the COVID-era money printing. This M2 contraction is seen by monetarists as evidence that inflation will ultimately return to target.
- What does M2 growth tell investors?
- Rapid M2 growth is a leading indicator of future inflation (12-18 month lag). M2 contraction suggests disinflationary pressure ahead. Fed watchers track the relationship between M2 velocity and growth to assess long-run inflation risks.
Economic data sourced from the Federal Reserve Bank of St. Louis (FRED). Data is updated according to the release schedule of the issuing agency. Provided for informational purposes only and does not constitute investment advice.