In Latest Recession Signal, Money Supply Growth Plummeted To A 3-Year Low In August

Sep. 29, 2022 3:13 AM ETTBT, TLT, TMV, IEF, SHY, TBF, EDV, TMF, PST, TTT, ZROZ, VGLT, TLH, IEI, BIL, TYO, UBT, UST, PLW, VGSH, SHV, VGIT, GOVT, SCHO, TBX, SCHR, GSY, TYD, EGF, VUSTX, FIBR, GBIL, UDN, USDU, UUP, RINF, AGZ, SPTS, FTSD, LMBS4 Comments
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Summary

  • Money supply growth fell again in August, dropping to a 36-month low.
  • Money supply growth tends to begin growing again before the onset of recession.
  • Another indicator of recession appears in the form of the gap between M2 and TMS.
  • When the difference between M2 and TMS moves from a positive number to a negative number, that's a fairly reliable indicator the economy has entered into recession.
  • Numerous other indicators point to just what we would expect: economic weakness and recession following a drop in money supply growth.

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By Ryan McMaken


Money supply growth fell again in August, dropping to a 36-month low. August's drop continues a steep downward trend from the unprecedented highs experienced during much of the past two years. During the 13 months between April

Chart: TMS - growth rates during most of 2020, and through April 2021, were much higher than anything we'd seen during previous cycles

chart: when the difference between M2 and TMS moves from a positive number to a negative number, that's a fairly reliable indicator the economy has entered into recession.

chart: the 2s/10s yield inversion went negative in all the same periods where the M2-TMS gap pointed to a recession.

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