M2 Money Supply MoM

M2 is a broad US money stock measure from the H.6 release Money Stock Measures, covering dollar money held by the US public. It covers currency outside the Treasury, the Federal Reserve Banks and vaults, plus demand deposits and other liquid deposits at US depository institutions. It also covers small-denomination time deposits under USD 100,000 and retail fund balances held by households; M1 sits inside M2 as its most liquid part. It leaves out time deposits of USD 100,000 or more, institutional funds, IRA and Keogh balances, foreign currency and government deposits.

Each observation is the monthly average for one calendar month in billions of USD, with history back to January 1959. Its publisher is the Board of Governors of the Federal Reserve System, the central bank of the United States. It comes out on the fourth Tuesday of each month at 1:00 PM Eastern Time, shifting to the next business day on a federal holiday.

Each release shows the most recent 17 months with component tables, memorandum items and seasonal factors. Levels revise as source data arrive, seasonal factors pass yearly review, and method changes apply back in time. The release includes no growth rates, so users compute MoM change themselves, and the Fed states no target level or trading rule.

M2 rises when its liquid parts, savings parts or fund holdings grow, and falls when they shrink or retirement deductions rise.

• M1, the liquid base: currency outside the Treasury, Federal Reserve Banks and vaults, plus demand and other liquid deposits.
• Small-denomination time deposits: time deposits under USD 100,000 at depository institutions, or less-liquid household savings.
• Retail money market fund balances: household holdings in retail money funds, a liquid part of non-M1 M2.
• Less: total IRA and Keogh balances: retirement savings at banks and money funds, subtracted as non-liquid money.

From February to April 2020, SA M2 rose from 15,473.4 to 16,014.3 to 17,042.9 in billions of dollars. That was about 3.5% growth in March and 6.4% in April, and M2 reached 17,893.0 in May 2020. By contrast M1 jumped from 4,773.3 in April 2020 to 16,275.9 in May 2020, after about 11.2 trillion of savings deposits moved into M1. Small time deposits slipped from 510.3 to 484.6 between March and April 2020, so an M1-only spike marks reclassification, not new money.

1. Compile levels: collect not seasonally adjusted (NSA) monthly averages for each component and for total IRA and Keogh balances; bank figures come from Call Reports.
2. Exclude foreign currency: remove deposits priced in foreign currencies using FR 2915 data, the foreign-currency deposits report.
3. Seasonally adjust: adjust each money component separately with X-13ARIMA-SEATS, the Census Bureau program, and leave IRA and Keogh balances raw. Tests found no seasonal pattern in those balances.
4. Build M1 and non-M1 M2 from the adjusted parts. SA M1 adds SA currency, demand and other liquid deposits, while non-M1 M2 adds SA small time and SA retail funds.
5. Build M2: set SA M2 to SA M1 plus non-M1 M2 minus NSA retirement balances, and build NSA M2 from raw parts likewise. The 18,400 sums 2,300 of currency, 5,400 of demand and 10,700 of other liquid deposits. The 3,200 sums 1,100 of small time and 2,100 of retail funds, so the total is 21,600 minus 1,000, or 20,600, with rounding gaps allowed.
6. Compute MoM %: take 100 times the rise in SA M2 over the prior month, divided by the prior month SA M2. For example, 20,600 after 20,500 gives 100 times the 100 rise divided by 20,500, or about 0.49%.