Chart of the Day: Euro M1 uptick

The European Central Bank (ECB) has updated its monetary aggregrate data for September and it makes interesting reading after the Greek bailout package announced yesterday.

As Delusional Economics forewarned in September, the narrow M1 money supply trend remains extremely weak:

Although there has been a minute uptick in M1, M3 has also picked up, but as Delusional Economics explained about the impact of the broader M3 money supply:

(M3) tends to be a trailing indicator. Narrow money, M1, has been a much better economic leading indicator historically; it contracted in real terms ahead of the last recession, while M3 was still growing solidly at that time.

The base case remains, the money supply remains in barely expanding territory (and is negative in real terms) whilst credit growth remains at near historic lows (and contracted in nominal terms for the month).


  1. It is unclear to me what is expected from the M1 and M3 data in so far as the growth rates being some sort of predictor for who knows what?

    Just looking at US M1 and M2 growth at FRED and movements don’t seem to be correlated with anything in particular. At a stretch you could say declines in US M1 growth coincide to expanding GDP …but at a stretch.

    (change units to YOY and redraw graph)

  2. I’m no expert, but I’m not sure if I agree with you Sideshow Bob, in the first graph you provided, each time it flattens or falls a recession seems to follow 6-12 months later (the last three recessions anyhow).