M2 Money Supply
Monitor the M2 money supply. Year-over-year contraction in M2 is a rare deflationary signal associated with severe economic stress.
Current Value
Trigger Level: Declining M2 = deflationary signal
AI Analysis
As of February 22, 2026, the M2 Money Supply stands at 22,411. The year-over-year growth rate is declining, which signals potential deflationary pressures. This trend increases recession risk, so investors should closely monitor this indicator.
What is the M2 Money Supply?
M2 measures the total money supply including cash, checking deposits, savings, money market funds, and other near-money assets. It represents the total liquidity available in the economy.
Why It Matters for Recession Risk
Year-over-year declines in M2 are extremely rare — occurring only a handful of times in the last century — and have been associated with deflationary recessions and severe economic stress.
Historical Context
M2 contracted YoY in 2023 for the first time since the 1930s, driven by quantitative tightening and bank lending pullback. Historically, money supply contraction precedes reduced economic activity.
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