Monetary Base in Uncharted Territory

(Negative) In May 2016, the monetary base was $3.855 trillion. This was the lowest level for the monetary base since February 2015.  Compared with one year ago, the monetary base decreased 2.5 percent, which was the fifth time in six months and ninth time in the last 12 months that it has contracted. As a result, the annual rate of change in the monetary base contracted at an accelerating rate for the third month in a row. The last time the annual rate of change contracted was June 1950. That was the last time it contracted three months in a row. The last time it contracted at an accelerating rate for three straight months was April 1949. Of course this was an extremely different time as the U.S. was ratcheting down its spending for WW2. So, the current changes in the monetary base are a significant event and uncharted territory for almost everyone alive today. It is likely that this will cause some surprising shifts in economic data.

You can see how the monetary base leads various machine tool sales and consumption data as well as primary plastics processing equipment at our monetary page.