Negative US monetary revisions
Simon Ward
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The Fed yesterday released revised monetary data reflecting the annual benchmarking process and updated seasonal factors. Growth of narrow and broad money in 2018 was revised down significantly – see first and second charts.
The new data, in particular, show a smaller recovery and lower levels of six-month growth at end-2018.
The third chart shows the impact of the revision on global (i.e. G7 plus E7 ) six-month real narrow money growth*. The trough in the series still occurs in October 2018, suggesting a low in six-month industrial output momentum around July. On the previous data, however, growth had risen to a nine-month high in December. The new December reading is no higher than September's.
The new data, therefore, reinforce the negative assessment here of near-term US and global economic prospects while suggesting that weakness will extend into late 2019.
*M1A is used as the US component of this measure. The opportunity was also taken to revise the adjustment made to Indian M1 data to attempt to correct for the impact of demonetisation, with the distortion now assumed to have fully washed out by August 2018.
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