China – Required Reserve Ratio vs. M1 Money Supply Growth The People’s Bank of China slashed the reserve requirement ratio for most financial institutions, but M1 money supply growth is currently near the lowest. This is not good news for GDP growth. Picture source: Jeroen Blokland
Real M1 Leads Euro Area Real GDP Growth An imminent recession in the euro area? This interesting chart suggests that real M1 leads euro area real GDP growth by 12 months. Picture source: Pictet Wealth Management
Euro Area Real M1 Growth Leads Euro Area Manufacturing PMI This chart suggests that euro area real M1 growth leads euro area manufacturing PMI by 9 months. Picture source: Morgan Stanley Research
M1 Money Supply vs. Yield Curve and Recessions Great chart showing the correlation between M1 money supply and the yield curve. The key factor for inverted yield curves is tight money. Picture source: BofA Merrill Lynch Global Research
S&P 500 Index vs. Global M1 Liquidity Another good correlation between the S&P 500 Index and global M1 liquidity, while the Fed plans to stop quantitative tightening. The money supply M1 is the amount of effective money in the economy. Picture source: Nordea and Macrobond
Global Real M1 Growth Leads Global Manufacturing PMI by around 6 Months When global real M1 money supply growth is very low, it does not bode well for global economic activity. Picture source: The Wall Street Journal
What Does M1 Money Supply Growth Tell Us About the Next Recession? M1 is the money supply that includes types of money commonly used for payment, basically currency outside banks and checking account balances. This is not the perfect recession indicator, but in recent history, it turns negative at least one year before a recession.
