Money stock: M1 and M2

What this series measures

The Federal Reserve's H.6 release reports the U.S. money stock. The two headline aggregates are M1 and M2.

• M1 is transaction money: currency in circulation, checkable deposits, and similar instruments.
• M2 is broader: M1 plus savings deposits, small time deposits, and retail money market funds.

The series are monthly and seasonally adjusted in the headline release. The underlying definitions are revised from time to time, so long historical comparisons require care.^[1]

How to read it

• Look at growth rates, not only levels.
• Compare nominal money growth with nominal GDP growth and inflation.
• Check whether the change is coming from currency, checkable deposits, or the broader store-of-value components.
• Remember that money growth is an outcome of credit creation, central-bank policy, and portfolio choices. It is not a policy lever.^[2]
• Use the FRED series pages for the latest observations and revision history.^[3]

What it does not tell you

• It does not tell you who holds the money or how quickly it is spent.
• It does not tell you whether credit is flowing to productive investment or asset purchases.
• It does not establish a mechanical relationship between money growth and inflation.
• It does not capture money-like instruments outside the official aggregates.

The IMF's monetary and financial statistics manual provides a framework for comparing measures across countries, but national definitions still differ.^[4]

A useful companion

The Bank of England's 2014 primer explains why the money aggregates are not a simple multiplier of reserves. It is a useful complement to the Fed's statistical release.^[2]