The Money Supply Fell for the Fifteenth Month in a Row

By Ryan McMaken – Mises Wire

Money-supply growth has now been negative for fifteen months in a row. During January 2024, the downturn continued as YOY growth in the money supply was at –6.13 percent. That’s up slightly from December’s rate of decline which was of –7.40 percent, and was below January 2023’s rate of –5.09 percent. With negative growth now lasting more than a year and coming in below negative five percent for the past thirteen months, money-supply contraction is the largest we’ve seen since the Great Depression. Prior to this year, at no other point for at least sixty years has the money supply fallen by more than 6 percent (YoY) in any month.

Money supply growth can often be a helpful measure of economic activity and an indicator of coming recessions. During periods of economic boom, money supply tends to grow quickly as commercial banks make more loans. Recessions, on the other hand, tend to be preceded by slowing rates of money supply growth.