Washington D.C. – The Federal Reserve recently released data for M2 in May ’24, revealing a lack of surprises in the numbers. The M2 figures reflect the impact of the economic response to the pandemic, with trillions of dollars in stimulus checks circulating and affecting various sectors of the economy.

During the initial stages of the pandemic, the influx of funds led to a significant increase in M2, as people held onto the money due to uncertainties and restrictions. However, as the economy gradually recovered in 2021, the circulation of these funds began, impacting inflation and economic growth.

Currently, the economy is operating at a 2% growth rate, with the excess M2 being gradually absorbed. Inflation remains an issue, particularly in estimating shelter costs, but overall, it is within the Fed’s target range.

Despite improvements, challenges remain, particularly in the housing market where high interest rates are affecting affordability. Commercial real estate prices have faced a decline, leading to concerns about potential bankruptcies in the industry.

While the economy has seen certain productivity enhancements due to the pandemic, concerns about the slow adjustment of interest rates persist. Liquidity conditions remain stable, but the impact of high rates on various sectors raises uncertainty about future economic performance.

As M2 trends show a gradual return to pre-pandemic levels, there is optimism that inflation is being managed effectively by the Fed. The focus now shifts to fiscal policy, with upcoming elections expected to shape future economic strategies. Overall, the economy’s recovery and stability hinge on various factors, including policy decisions and global economic conditions.