Economic News Blog
11. January 2017

Monetary Base Contracts for 10th Month

(Negative) In December 2016, the monetary base was $3.559 trillion, which was its lowest level since September 2013. Compared with one year ago, the monetary base decreased 8.0 percent, which was somewhat slower than last month but still very fast historically. This was the 11th time in 13 months and 16th time in the last 19 months that it has contracted. As a result, the annual rate of change in the monetary base, now -5.4percent, contracted at an accelerating rate for the 10th month in a row. The last time the annual rate of change contracted faster was May 1938. This was during the second leg down of the Great Depression. So, perhaps this is an indication that we are entering the second, and hopefully final, leg down in the Great Recession. It is likely that this will cause some surprising shifts in economic data.

Comments are reviewed by moderators before they appear to ensure they meet Gardner Business Media’s submission guidelines.
blog comments powered by Disqus