Annual M2 Growth Below 2% for the Last 4 Weeks

Money supply (M2) data through March are presented in the graph above, showing annual growth rates. Comparing M2 growth during the 2008-2009 period to the 2001-2002 shows comparable patterns, with a much greater deceleration in money growth over the last quarter or so than what happened in the 2003-2004 period. There were some periods during 2006-2008 when inflation was in the 4-5% range, but those periods were short and inflation was not sustained. Given the growth in M2 over the last few years, that would probably be the worst case scenario over the next 2-3 years, and the recent deceleration in M2 growth might prevent that from happening.