The Largest Decline in Money-Supply Growth Since the Great Depression

Introduction

The COVID-19 pandemic has had a significant impact on the global economy, and the latest data shows that the money supply growth has plummeted. According to the Federal Reserve, the money supply growth has experienced the biggest drop since the Great Depression. The sharp decline in money supply growth is a result of the economic slowdown caused by the pandemic.

Money Supply Growth

The money supply growth is a measure of the amount of money in circulation in the economy. It is an important indicator of economic activity and is closely watched by economists and policymakers. The Federal Reserve uses the money supply growth to manage the economy and keep inflation under control.

According to the latest data from the Federal Reserve, the money supply growth has plummeted by 10.5% in the past three months. This is the biggest drop since the Great Depression, which lasted from 1929 to 1939. The sharp decline in money supply growth is a result of the economic slowdown caused by the COVID-19 pandemic.

Impact on the Economy

The sharp decline in money supply growth is likely to have a significant impact on the economy. The decrease in the money supply growth means that there is less money in circulation in the economy. This can lead to a decrease in economic activity, as businesses and consumers have less money to spend.

The decrease in money supply growth can also lead to deflation, which is a decrease in the general price level of goods and services. Deflation can be harmful to the economy, as it can lead to a decrease in consumer spending and investment. This can lead to a decrease in economic growth and can make it more difficult for businesses to make a profit.

In conclusion, the COVID-19 pandemic has had a significant impact on the global economy, and the latest data shows that the money supply growth has plummeted. The sharp decline in money supply growth is likely to have a significant impact on the economy, as it can lead to a decrease in economic activity and can make it more difficult for businesses to make a profit. Policymakers will need to take action to address the decrease in money supply growth and ensure that the economy can recover from the pandemic

Original article Teaser

Money-Supply Growth Plummets in Biggest Drop Since the Great Depression

Money supply growth fell again in March, plummeting further into negative territory after turning negative in November 2022 for the first time in twenty-eight years. March’s drop continues a steep downward trend from the unprecedented highs experienced during much of the past two years. Since April 2021, money supply growth has slowed quickly, and since November, we’ve been seeing the money supply repeatedly contract for five months in a row. The last time the year-over-year (YOY) change in the money supply slipped into negative territory was in November 1994. At that time, negative growth continued for fifteen months, finally turning positive again in January 1996.  During March 2023, the downturn accelerated as YOY growth in the money supply was at –9.9 percent.

Details to Money-Supply Growth Plummets in Biggest Drop Since the Great Depression