Investors,
Adding to yesterday’s analysis of real GDP growth, this chart below helps to contextualize the size & trend of the U.S. economy relative to M2 money supply:
Top: Nominal GDP / M2
Bottom: Real GDP / M2
While both the nominal & real economy have been growing since COVID, one could argue that the growth is artificial due to a larger money supply! The good news is that both metrics have actually been rising again lately, though it’s unobservable for Real GDP / M2 due to the scale of the long-term downtrend.
Zooming in, we can actually observe a moderate increase for Real GDP / M2:
I thought this was another useful context for measuring GDP in Q3 2023, so I hope this is a valuable perspective to add to your understanding of economic trends.
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