Economic News Blog
Posted by: Steven Kline, Jr. 9. July 2019

Monetary Base Contraction Accelerates

In June, the monetary base was $3.290 trillion, which was the second lowest level since June 2013 (only May 2019 was lower). May was the 16th consecutive month of month-over-month contraction in the monetary base. For each of the last eight months, the month-over-month rate of contraction was faster than 10%. Only the ten-month period from June 1921 to March 1922 had a longer streak of double-digit contraction month-over-month. 

As a result, the annual rate of change in the money supply contracted at an accelerating rate for the ninth month in a row, falling to -10.2%. This was the fastest rate of annual contraction in nearly a century. The money supply is indicating that the current decelerating growth in machine tool orders (and quite likely capital equipment in general) will continue for some time.

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