In February, the monetary base was $5.447 trillion, which was an increase from the previous month and the highest level ever. Compared with one year ago, February’s monetary base was up 57.7%, which was the sixth month in a row and eighth in the last 10 months with faster than 50% growth. Also, February was the fastest rate of growth since May 2020 and the second-fastest since October 2009. The accelerating rate of growth was likely a result of the latest round of stimulus checks. This was the 11^th consecutive month that the month-over-month rate of change was faster than 44%. And February was the 15^th month in a row of month-over-month growth. 

The annual rate of growth accelerated to 48.6% in February, which was the 11^th straight month of accelerating growth and the fastest rate of growth since April 2010. Based on the monthly and quarterly trends in the money supply, the annual rate of change will continue to accelerate for the first half of 2021.

Historically, the annual rate of change in the monetary base leads capital equipment consumption, specifically machine tool orders, by 12-18 months. Although, the lead time between the monetary base and capital equipment consumption shrunk over the last decade. The recent rapidly accelerating growth in the monetary base should eventually lead to accelerating growth in machine tool orders and capital equipment in general. It is likely that machine tool orders bottomed in August. The chart below shows the possible annual rate of change in machine tool orders (dashed blue line).