Money Supply

M1 Money Supply

M1 is currency, demand deposits and other liquid deposits. Since May 2020 it has included savings deposits.

It’s a measure of the most liquid portions of the money supply, indicating how much “active” money is available for immediate spending and transactions.

Its relevance lies in its ability to reflect immediate liquidity: the cash and coins people hold and the funds they can quickly draw from their bank accounts to make purchases.

This liquidity is crucial for understanding consumer behaviour, business investment, and the potential for economic growth or inflation.

Changes in the M1 Money Supply can influence inflation, interest rates, and overall economic activity.

Recession Signal

A decrease in M1 money supply might indicate a slowing economy as less money is available for spending. Like many indicators, there is no magic number that tells us we’re in a recession.

More, we look for a decline from a relative high, on the chart.

Track this yourself

You can easily track the M1 money supply here: