Extinguished Consumer Surpluses: CFS money supply measures

Wall Street Journal reporter, Rachel Louise Ensign, wrote a terrific piece on the consumer yesterday – “Americans Finally Start to Feel the Sting from the Fed’s Rate Hikes.”  The story highlights how:

– “Consumers… are discovering that, because of the Federal Reserve’s rate increases, their money gets them a lot less than it would have a few years ago.”

– “Consumers are carrying much higher [credit card] balances than they were two years ago.”

Interestingly, CFS Divisia M2 reveals another core issue regarding the sting from higher rates and tighter policy.  Swollen consumer surpluses in the aftermath of the essential post-Covid fiscal and monetary response are now extinguished.

To view “Extinguished Consumer Saving Balances – CFS Divisia M2, actual and predicted
www.CenterforFinancialStability.org/research/Extinguished_Balances_20230927.pdf

Note: The CFS Divisia M2 measure of consumer liquidity includes currency, demand deposits, other liquid deposits, and retail money market funds.

CFS Monetary Measures for July 2023

Today we release CFS monetary and financial measures for July 2023. CFS Divisia M4, which is the broadest and most important measure of money, fell by 1.9% in July 2023 on a year-over-year basis, following a decrease of 2.0% in June.

For Monetary and Financial Data Release Report:
https://centerforfinancialstability.org/amfm/Divisia_Jul23.pdf

For more information about the CFS Divisia indices and the data in Excel:
https://centerforfinancialstability.org/amfm_data.php

Bloomberg terminal users can access our monetary and financial statistics by any of the four options:

1) ALLX DIVM
2) ECST T DIVMM4IY
3) ECST –> ‘Monetary Sector’ –> ‘Money Supply’ –> Change Source in top right to ‘Center for Financial Stability’
4) ECST S US MONEY SUPPLY –> From source list on left, select ‘Center for Financial Stability’

CFS Monetary Measures for June 2023

Today we release CFS monetary and financial measures for June 2023. CFS Divisia M4, which is the broadest and most important measure of money, fell by 2.0% in June 2023 on a year-over-year basis, following a decrease of 2.4% in May.

For Monetary and Financial Data Release Report:
https://centerforfinancialstability.org/amfm/Divisia_Jun23.pdf

For more information about the CFS Divisia indices and the data in Excel:
https://centerforfinancialstability.org/amfm_data.php

Bloomberg terminal users can access our monetary and financial statistics by any of the four options:

1) ALLX DIVM
2) ECST T DIVMM4IY
3) ECST –> ‘Monetary Sector’ –> ‘Money Supply’ –> Change Source in top right to ‘Center for Financial Stability’
4) ECST S US MONEY SUPPLY –> From source list on left, select ‘Center for Financial Stability’

The Federal Reserve needs to stay put on rates

Today, the Financial Times published Sheila Bair’s Opinion piece noting that:

– The Fed should feel vindicated in its decision to pause rate rises at its policy-setting meeting last month.  Although it seems poised to raise them again, the Fed should stay put.

– If the Fed does raise rates again, it could temper the impact by only raising rates on bank reserves, while leaving the rate it pays to money market funds and other non-bank financial intermediaries where it is.

We look forward to any comments you might have.

To view the full article:
https://on.ft.com/3QatT1l

Sheila Bair is a former chair of the US Federal Deposit Insurance Corporation and a senior fellow and Advisory Board member at the Center for Financial Stability.

CFS Monetary Measures for May 2023

Today we release CFS monetary and financial measures for May 2023. CFS Divisia M4, which is the broadest and most important measure of money, fell by 2.5% in May 2023 on a year-over-year basis, following a decrease of 3.2% in April.

For Monetary and Financial Data Release Report:
https://centerforfinancialstability.org/amfm/Divisia_May23.pdf

For more information about the CFS Divisia indices and the data in Excel:
https://centerforfinancialstability.org/amfm_data.php

Bloomberg terminal users can access our monetary and financial statistics by any of the four options:

1) ALLX DIVM
2) ECST T DIVMM4IY
3) ECST –> ‘Monetary Sector’ –> ‘Money Supply’ –> Change Source in top right to ‘Center for Financial Stability’
4) ECST S US MONEY SUPPLY –> From source list on left, select ‘Center for Financial Stability’

Markets and Volatile Monetary Policy: Empirical Lessons from Banking Instability

Ahead of the upcoming FOMC meeting, the Fed is dealing with another problem of its own creation. The stock market is elevated and the economy and inflation are on the descent.

Monetary policy meaningfully contributed to the distress at the Silicon Valley Bank and recent swings in financial markets.

“Markets and Volatile Monetary Policy: Empirical Lessons from Banking Instability” offers a solution for officials and an opportunity for investors to profit.

We look forward to any comments you might have.

To view the full article:
https://centerforfinancialstability.org/research/Markets_Volatile_Monetary_061123.pdf

Last week, we released “A Story of Money, Inflation, and the CFS.”

A Story of Money, Inflation, and the CFS

At the Center for Financial Stability (CFS), we see the world differently. We see the world through monetary goggles – not at the exclusion of other variables, but from a different perspective.

Since 1) inflation proved to not be transitory after the post-pandemic fiscal and monetary response and 2) inflation remained negligible after the big money supply increases in 2009 to 2010, our perspective is essential for:

  • Officials to strengthen the financial system while more effectively promoting growth and
  • Investors to safeguard assets, manage financial institutions, or seek profits.

We look forward to any comments you might have.

Next week, CFS will release a paper on “Empirical Lessons for the Fed from Banking Instability.”

To view the full article:
https://www.centerforfinancialstability.org/research/Money_Story_060623.pdf

CFS Monetary Measures for April 2023

Today we release CFS monetary and financial measures for April 2023. CFS Divisia M4, which is the broadest and most important measure of money, fell by 3.2% in April 2023 on a year-over-year basis, following a decrease of 2.4% in March.

For Monetary and Financial Data Release Report:
https://centerforfinancialstability.org/amfm/Divisia_Apr23.pdf

For more information about the CFS Divisia indices and the data in Excel:
https://centerforfinancialstability.org/amfm_data.php

Bloomberg terminal users can access our monetary and financial statistics by any of the four options:

1) ALLX DIVM
2) ECST T DIVMM4IY
3) ECST –> ‘Monetary Sector’ –> ‘Money Supply’ –> Change Source in top right to ‘Center for Financial Stability’
4) ECST S US MONEY SUPPLY –> From source list on left, select ‘Center for Financial Stability’

FT: Bair on Protecting Smaller Banks from Investor Nerves

Today, the Financial Times published Sheila Bair’s Opinion piece “Congress must act to protect smaller banks from investor nerves. Measures to shield operational business accounts, introduced during Covid, should be triggered urgently.”

While she does not believe that universal coverage for all accounts is the answer, she does advocate for using the Transaction Account Guarantee (or TAG programme). “To promote banking competition and mitigate concentrations of power, we need to help them protect their core business accounts. Congress needs to reinstate TAG.”

We look forward to any comments you might have.

To view the full article:
https://www.ft.com/content/caae5e89-4f6f-4ec8-94c7-0c15ed4592fa

Sheila Bair is a former chair of the US Federal Deposit Insurance Corporation and a senior fellow and Advisory Board member at the Center for Financial Stability.

CFS Monetary Measures for March 2023

Today we release CFS monetary and financial measures for March 2023. CFS Divisia M4, which is the broadest and most important measure of money, fell by 2.4% in March 2023 on a year-over-year basis, following a decrease of 1.3% in February.

For Monetary and Financial Data Release Report:
https://centerforfinancialstability.org/amfm/Divisia_Mar23.pdf

For more information about the CFS Divisia indices and the data in Excel:
https://centerforfinancialstability.org/amfm_data.php

Bloomberg terminal users can access our monetary and financial statistics by any of the four options:

1) ALLX DIVM
2) ECST T DIVMM4IY
3) ECST –> ‘Monetary Sector’ –> ‘Money Supply’ –> Change Source in top right to ‘Center for Financial Stability’
4) ECST S US MONEY SUPPLY –> From source list on left, select ‘Center for Financial Stability’

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