Early indicators point to another contraction in March, as the M2 money supply tumbled 3.13 percent year over year for the week ending March 6. In total, the U.S. money supply stood at $21.099 trillion at the end of February. Between 1929 and 1933, the money supply plummeted by 28 percent. Despite the year-over-year percentage decline, the money supply remains nearly 38 percent above the pre-pandemic level. The downward trend, which started in February 2021, resulted from the central bank reversing its pandemic-era liquidity injections, the Fed reducing the enormous balance sheet, and sliding bank deposits.
Across the globe, many economies are reporting slowing or contracting M1 money supply growth. In the European Union, the M1 annual growth rate contracted by 2.7 percent in February, down from negative 0.8 percent in January. The United Kingdom’s M1 slowed to 1.55 percent in January. The M1 for Canada fell for three straight months to close out 2022, tumbling 3.57 percent in December.