U.S. Money Supply Is Contracting, Something Not Seen Since the Great Depression

M2 money supply is enduring its first meaningful drop in 90 years. A rarity with only five such occurrences in history, is sounding alarms for a potential economic downturn. With a 3.17% year-over-year drop and a more significant fall since July 2022, this contraction in available capital hints at reduced consumer spending and possible deflationary pressures. Historically, similar declines have preceded severe depressions and high unemployment. While modern monetary policy may mitigate some risks, the current shrinkage in money supply poses a stark threat to the economy and stock market stability.