Definition
The total amount of money in the economy. M2 is the broad measure the Fed publishes: cash, checking and savings deposits, small time deposits and retail money market funds.
The story
M2 grew by more than 25% in the year to February 2021 as pandemic relief money flowed into bank accounts, the fastest growth in decades. Then, from late 2022 into 2023, it shrank year over year. The St. Louis Fed says that hadn't happened in any month since at least 1959, as far back as the Fed's monthly data go.
Why markets watch it
Big swings in the money supply are part of the debate over what drives inflation.
See it in the story
Connects to
InflationMoney creationQuantitative easingThe Federal Reserve
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms