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By New_Deal_democrat March 3, 2017 9:28 am
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More on real M1 and M2
I crunched a little more information about M1 and M2 after yesterday's post. Basically both real M1 and M2 have gone sideways since early last August.  That's what the first graph, monthly through January, normed to 100 as of last August, shows:
We have three of four weeks of February reported now, so the below graph is nominal (since we don't have February inflation) through the last week:
Nominal M1 is running flat m/m, and nominal M2 is up slightly, both with one week to go.
Again, I am making no forecast of whether or not the trend since last August will continue.  All I can say is that if it continues just one or two more weeks, M2 will fall into the neutral zone and possibly all the way to a negative.  M1 is still running positive, but more weakly so.
Since real money supply and interest rates are the two of the three big financial data points in the long leading indicators (the final being the yield curve), and can turn negative 2 years or more before a recession actually hits, it seems noteworthy that both may be neutral and possibly negative shortly.
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