US M2 Money Supply (YoY % Change)
Year-over-year percentage change in US M2 money supply from January 1960 to the latest release (5.66 percent for August 2026). The growth-rate view of M2: it spots inflection points faster than the level view and is the standard form used by macro researchers and central-bank commentary. The 2020-2021 spike to 26.8 percent (February 2021) was the highest M2 growth rate in the series. The April 2023 trough at minus 4.6 percent was the deepest reading, and the 2022-2024 dip below zero was the only one in the series. AUD-trader framing inline.
Chart
US M2 money supply year-over-year percentage change from January 1960, derived from FRED M2SL. Recessions shaded from 2001. Above zero = M2 expanding; below zero = M2 contracting. The 7% reference line marks the rough threshold above which risk-asset returns have historically been strong.
What does M2 YoY measure?
The year-over-year percentage change in M2 captures how fast the total US money stock is expanding (or contracting) in proportional terms. The level of M2 grows almost monotonically over decades; the rate of growth oscillates between roughly 0 percent and 10 percent in normal times, with extremes during crises.
The YoY transformation strips out the long-run growth trend and surfaces the cycle. Inflection points in M2 YoY (turning from rising to falling, or vice versa) line up reliably with inflection points in Fed policy expectations and, with a lag, in risk-asset performance.
M2 growth regimes since 2000
| Period | M2 YoY range | Backdrop | Risk-asset outcome |
|---|---|---|---|
| 2000-2007 | 3-10% YoY (6.2% avg) | Normal expansion, low rates after 2001 | Housing boom, GFC building |
| Late 2008-2009 | +10% spike | QE1, GFC emergency response | Equity bottom March 2009, multi-year bull starts |
| 2010-2019 | 2-10% YoY (5.8% avg) | QE2 / QE3, ZIRP, gradual normalisation | Long equity bull, BTC 2013/2017/2020 cycles |
| 2020 Q2-Q4 | +17% to +25% | COVID fiscal + monetary surge | Risk-on; BTC AUD about 5x from the March low to 2020 year-end |
| 2021 | +27% falling to +12% | Tapering, transitory inflation narrative | BTC AUD cycle top November 2021 |
| 2022-2023 | +11.7% (Jan 2022) falling to -4.6% (Apr 2023) | Fastest hiking cycle since the early 1980s | BTC bear, equity bear, USD strength |
| 2024-2026 | +0.1% (Mar 2024) rising to +5.7% (Aug 2026) | Hold, cuts from Sep 2024, hike Sep 2026 | Cycle 2024-2026, gradual liquidity rebuild |
Trader takeaway
M2 YoY is a regime variable, not a trade-timing signal. Useful rules of thumb:
- M2 YoY above 7 percent + rising. Maximum risk-on regime. Position sizing on BTC, ASX growth, and US tech can lean toward the upper end of edge.
- M2 YoY between 3 and 7 percent. Neutral regime. Default position sizing. Trade the cycle position individually rather than the regime.
- M2 YoY below 3 percent or contracting. Tightening regime. Reduce risk-on size, prioritise capital preservation, hold more AUD cash or short-duration AU government bonds.
- M2 YoY turning at extremes. The inflection from contraction back toward expansion (from the April 2023 trough to positive growth in March 2024) and from peak expansion back toward neutral (2021) are the highest-confidence regime change moments. Position accordingly when the inflection is confirmed by 2-3 consecutive monthly readings.
Methodology
- Source. Computed from FRED series M2SL (seasonally adjusted monthly M2).
- Formula. YoY% = (M2 this month / M2 same month prior year - 1) x 100.
- Earliest valid datapoint. 12 months after the M2SL series starts in January 1959, so YoY values run from January 1960.
- Recession shading. NBER-dated US recessions from 2001 onwards (2001, 2007-09, 2020). Earlier recessions are not shaded.
- Refresh cadence. An automated cloud refresh pulls the series from FRED twice a day (07:30 and 13:30 Sydney time) and the site rebuilds when the data changes. If FRED is unreachable, the last good data is kept.
Related tools
- M2 Money Supply level - the absolute USD billions view.
- Fed Funds Rate - the policy rate that drives M2 cycles.
- CPI Inflation YoY - the consumer-price downstream of M2.
- Fed Balance Sheet - the QE/QT quantity channel.
- Bitcoin Log Regression (AUD) - the BTC cycle structure M2 explains.
Frequently asked questions
It tells you how fast the US money supply is expanding or contracting in percentage terms relative to the same month one year ago. The YoY view strips out the level effect and surfaces inflection points: when M2 YoY is rising, the liquidity backdrop is improving (or stabilising at high growth); when it is falling, liquidity is tightening (or expanding more slowly). Sustained M2 YoY above 7 percent has tended to coincide with strong risk-asset returns. Sustained M2 YoY below 3 percent or negative has coincided with drawdowns.
The 2022-2023 episode is the only time M2 YoY has gone negative since the series began (YoY values start in 1960). M2 YoY peaked at 26.8 percent in February 2021, then fell steadily as the Fed hiked from near zero to 5.33 percent in 16 months. M2 YoY went negative in December 2022, bottomed at minus 4.6 percent in April 2023 and turned positive again in March 2024. The contraction coincided with the 2022 bear market in BTC and US equities. The M2 level stopped falling in late 2023 as the Fed paused hiking and bank deposit flight after the SVB collapse stabilised.
Because the velocity of money (how fast each dollar in M2 changes hands) can move in the opposite direction. The 2020-2022 M2 surge produced asset-price inflation (housing, equities, crypto) before consumer-price inflation because velocity collapsed initially (lockdowns, mass-saving). As lockdowns ended and velocity normalised, the previously created M2 hit goods markets and CPI YoY peaked at about 9 percent in mid-2022. M2 leads, but the lag and velocity overlay make a direct M2-equals-CPI rule unreliable.
Loosely yes, but with caveats. The biggest M2 surge of the Bitcoin era, in 2020-2021, came alongside its strongest bull market. But the lag is typically cited at two to three months, and there are episodes where short-rate hikes overwhelm the M2 signal. The cleanest reading is: M2 YoY trending up + Fed Funds trending down + USD index trending down is a triple-bullish liquidity setup. The opposite combination is triple-bearish. Use M2 alongside the other macro variables, not in isolation.
The Reserve Bank of Australia publishes Australian M3 monthly. AU M3 is broader than US M2 and includes large-denomination time deposits, but the spirit is similar - it measures the total stock of money in the AUD economy. AU M3 growth and US M2 growth often move in the same direction over multi-year windows because both respond to global financial-conditions cycles. For AU-resident traders, US M2 matters more for global risk-asset positioning; AU M3 matters more for AUD-specific credit conditions and AU housing.
Computed from FRED series M2SL (seasonally adjusted monthly M2 in USD billions). The YoY series is derived locally each time the data refreshes: for each month, current value divided by value 12 months prior, minus one, times 100. This is the standard formulation used by the Fed itself and by macro research houses. An automated refresh pulls M2SL from FRED twice a day (07:30 and 13:30 Sydney time) and the site rebuilds when the data changes; if FRED is unreachable, the last good data is kept.
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