M2 Money Supply
Monitor the M2 money supply. Year-over-year contraction in M2 is a rare deflationary signal associated with severe economic stress.
Current Value
Trigger Level: Declining M2 = deflationary signal
Historical Trend
AI Analysis
Today's M2 Money Supply stands at $22.7 trillion, reflecting a recent upward trend from $22.26 trillion in early October 2025, with a notable increase to $22.67 trillion by late March 2026. However, the growth rate has shown signs of deceleration, as the latest value is only marginally higher than the previous readings, indicating a potential inflection point. This trend suggests increasing recession risk, as the declining growth rate of M2 may signal deflationary pressures, which could hinder economic activity. Investors should monitor this closely, as sustained declines in M2 could lead to tighter financial conditions and reduced consumer spending.
What is the M2 Money Supply?
M2 measures the total money supply including cash, checking deposits, savings, money market funds, and other near-money assets. It represents the total liquidity available in the economy.
Why It Matters for Recession Risk
Year-over-year declines in M2 are extremely rare — occurring only a handful of times in the last century — and have been associated with deflationary recessions and severe economic stress.
Historical Context
M2 contracted YoY in 2023 for the first time since the 1930s, driven by quantitative tightening and bank lending pullback. Historically, money supply contraction precedes reduced economic activity.
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