Monetary Base Hits Lowest Point Since May 2013

A falling monetary base typically leads to lower capital equipment consumption.

In September, the monetary base was $3.210 trillion, which was the lowest level since May 2013. September was the 19th consecutive month of month-over-month contraction in the monetary base. The month-over-month contraction of 10.1% broke a string of four-straight months of decelerating contraction and two-straight months of contraction under than 10%. 

The annual rate of change in the money supply continued to contract at an accelerating rate for the 12th month in a row, falling to -10.9%. This was the fourth month in a row that the rate of contraction was faster than 10% and the fastest rate of annual contraction in nearly a century. A contracting money supply tends to lead to a contraction in capital equipment spending.


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