Long Term Perspective
Just about every economic indicator has its fifteen minutes of fame. Money supply, released every week by the Federal Reserve, was closely watched in the 1980s. Changes in money supply are supposed to mirror changes in economic growth. The missing link in the relationship is velocity - the rate at which money turns over in the economy. M2 includes currency, checking accounts, money market accounts, and small savings accounts at banks. The relationship between growth in M2 and growth in GDP is not as good as it used to be, but some diehard money supply fans remain, although not necessarily on the FOMC.

Short Term Perspective
M2 growth moderated in the third quarter, but has not fluctuated very much in the past year. A persistent drop in money supply would signal slower GDP growth while rapid monetary growth can lead to inflationary pressures in a fully employed economy operating at high capacity rates.