The money supply growth rate rose in July, climbing to a six-month high, but remaining well below the growth rates typically seen during 2017 and 2018.

In July, year-over-year growth in the money supply was at 2.19 percent. That was up slightly from June's rate of 1.98 percent but was well down from July 2018's rate of 4.07 percent.

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The money-supply metric used here — the "true" or Rothbard-Salerno money supply measure (TMS) — is the metric developed by Murray Rothbard and Joseph Salerno, and is designed to provide a better measure of money supply fluctuations than M2. The Mises Institute now offers regular updates on this metric and its growth. This measure of the money supply differs from M2 in that it includes treasury deposits at the Fed (and excludes short-time deposits, traveler's checks, and retail money funds).

The M2 growth rate also increased in July, growing 5.12 percent, compared to June's growth rate of 4.74 percent. M2 grew 3.94 percent in July of last year. The M2 growth rate had fallen considerably from late 2016 to late 2018 but has been growing again in recent months.

Money supply growth can often be a helpful measure of economic activity. During periods of economic boom, money supply tends to grow quickly as banks make more loans. Recessions, on the other hand, tend to be preceded by periods of slow-downs in rates of money-supply growth.

Moreover, periods preceding recessions often show a growing gap between M2 growth and TMS growth. We saw this in 2006-7 and in 2000-1. The gap between M2 and TMS narrowed considerably from 2011 through 2015 but has grown in recent years.

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The overall M2 total money supply in July was $14.8 trillion, and the TMS total was $13.5 trillion.