Stagnation: M2 Money Velocity Continues Falling To All-time Lows!

Jon Economy, Market Commentary

M2 Money Velocity is the frequency at which one unit of currency is used to purchase domestically- produced goods and services within a given time period. It is measured by looking at the change in nominal GDP compared to the change in M2 money stock.
M2 velocity keeps falling after peaking in 1997. What is notable after the 1997 peak is that asset bubbles have replaced solid economic growth. For example, the highest GDP growth during the Clinton years exceeded 5% YoY, while the highest GDP achieved under George W Bush was 4.41% YoY. Real GDP YoY never exceeded 3.5% YoY under Obama.

This post was published at Wall Street Examiner on December 28, 2016.