Money Supply

Money Supply, officially Money Stock Measures (H.6), counts US dollar holdings that make up M1 and M2. M1, or narrow money, covers the most liquid forms: physical cash outside vaults, checking-type demand deposits, and other liquid deposits including savings. M2, or broad money, equals M1 plus small time deposits under $100,000 and retail money market funds, or household-type fund balances, minus retirement accounts. The Federal Reserve Board, the central bank of the United States, compiles it from bank and fund reports. It is a statistical compilation, not a survey, with no stated sample size.

Monthly averages stretch back to January 1959 within statistics compiled since 1914. Components are shown for the whole industry rather than split by bank type. It covers neither M3 nor equities nor institutional funds, and it excludes foreign currency deposits, government deposits, and deposits owed to foreign banks. Levels are read in billions of dollars with no target level, and the aggregates help shape US monetary policy.

Release occurs on the fourth Tuesday of each month, generally at 1 pm Washington time, shifting to the next business day after a federal holiday. Each release shows monthly average levels in billions of dollars for the most recent 17 months across 3 tables, with no target level.

Table 1 gives M1, M2 and the monetary base, or cash plus bank reserves. Other tables break down components, and the publisher gives no trading signal. Reserve and memorandum items appear unadjusted only. Unadjusted weekly averages appear in the Data Download Program, while adjusted data undergo yearly seasonal review and quarterly benchmarking against fuller reports. Method changes apply retroactively, and figures are read as levels and monthly changes.

M2 rises when liquid deposits or household fund holdings grow faster than retirement account deductions.

• Currency: physical cash outside the Treasury, Federal Reserve Banks and vaults.
• Demand deposits: checking balances at banks, net of collection items and amounts owed to banks or governments.
• Other liquid deposits: savings deposits, including money market deposit accounts, plus transaction accounts such as NOW balances.
• Small-denomination time deposits: time deposits under $100,000, or less liquid household savings such as certificates of deposit (CDs).
• Retail money market fund balances: household-type fund holdings offering market-based liquid savings.
• Less IRA and Keogh balances: retirement accounts subtracted from M2 because early withdrawal penalties make them illiquid.

Regulatory redefinition once quadrupled M1 without creating money. In May 2020 savings deposits moved into M1 after regulators removed the transfer limit and made savings transaction-like.

Seasonally adjusted M1 jumped from $4,799.1bn in April 2020 to $16,268.1bn in May 2020. M2 barely moved, from $17,033.8bn to $17,883.2bn, because it already contained those savings. Always check M2 and release notes before reading new money into the move.

1. Seasonal adjustment: each component is adjusted separately with X-13ARIMA-SEATS for calendar patterns, except retirement balances which show no seasonal pattern.
2. M1: sum of cash, demand deposits and other liquid deposits, where every dollar counts as one dollar.
3. M2: M1 plus small time deposits and retail funds, minus unadjusted retirement balances. Totals are monthly averages in billions, so rounding can break exact sums.
4. Monetary base: cash in circulation plus bank reserves at the Fed.
5. Nonborrowed reserves: total reserves minus total Fed borrowings.