In September, the monetary base was $4.880 trillion, which was an increase from the previous month for the second month in a row. Compared with one year ago, September’s monetary base was up 52.4%, which was the third fastest rate of growth since October 2009. This was the sixth consecutive month that the month-over-month rate of change was faster than 44%. (In 2009, the monetary base increased more than 100% five times in the first eight months of the year.) This was the 10th month in a row of month-over-month growth. The annual rate of growth accelerated to 25.3% in September, which was the sixth straight month of accelerating growth and the fastest rate of growth since October 2014.

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. Based on the historical relationship, machine tool orders should bottom sometime between September 2020 and February 2021.