what is m2 
m2 is the u s federal reserve s estimate of the total money supply including all the cash people have on hand plus all the money deposited in checking accounts savings accounts and other short term saving vehicles such as certificates of deposit cds retirement account balances and time deposits above 100 000 are omitted from m2 1the federal reserve tracks a separate money supply number m1 that includes currency in people s pockets or their checking accounts and savings accounts the money deposited in time deposits and money market funds is not counted in m1 for the fed s purposes this is near money that is the funds cannot be used as a medium of exchange and are not instantly convertible to cash 1understanding m2measuring the money supply of an economy is a challenging proposition due to the complexity of the concept of money and the size and level of detail of an economy there are multiple ways of measuring a money supply these measures are typically classified as m s and fall along a spectrum from narrow to broad monetary aggregates typically the m s range from m0 to m3 with m2 representing a fairly broad measure m2 is a more comprehensive calculation than m1 because it includes assets that are highly liquid but are not intended to be routinely used as cash consumers and businesses don t usually use time deposits when making purchases or paying bills but in a pinch they could convert them to cash in short order 13 includes numbers on large time deposits institutional money market funds and other large liquid assets this is published on a quarterly basis 2the federal reserve releases m1 and m2 numbers every thursday at 4 30 p m the st louis fed tracks the numbers 3economists usually use the broader m2 number when discussing the money supply because modern economies often involve transfers between different account types for example a business may periodically transfer 10 000 from a money market account to a checking account this transfer would increase m1 which doesn t include money market funds while keeping m2 stable since it contains both accounts m2 is a critical factor in forecasting inflation inflation and current interest rates have major ramifications for the general economy as they heavily influence job availability consumer spending business investment currency strength and trade balances 4changes in money supplythe federal reserve s dual mandate is price stability and maximum sustainable employment one of the ways it works to maintain price stability is by manipulating the m2 money supply the m2 numbers provide important insight into the direction extremity and efficacy of central bank policy m2 has consistently been growing it was 4 7 trillion on jan 3 2000 and was 20 8 trillion on march 2 2024 the most extreme growth occurred from feb 2020 to june 2020 during the coronavirus pandemic when m2 jumped from 15 3 trillion to 18 trillion other large increases have also coincided with economic weakness during which expansionary monetary policy was deployed by the central bank 5