Capital Markets Summer 2022: Revealing Recession Patterns
III
Slowing Money Supply Economic Crosscurrents
• The increase in the Federal Funds rate, decrease in the Federal Reserve’s assets, and slowdown in government spending is constricting money supply growth and moderating economic activity
I
II
Money Supply Growth
Actual
Forecasted
R 2 =77%
25%
III
20%
15%
IV
10%
Money supply may shrink for the first time since the 1930s
5%
0%
V
-5%
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Source: Piper Sandler and Alger. Last actual data point is May 2022. Forecast based on year-over-year change in Federal Funds rate, Federal Reserve’s assets, and U.S. Federal Expenditures.
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