August 21st, 2008

FLASH UPDATE - August 21, 2008

FLASH UPDATE

August 21, 2008

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July M3 Expanded Month-to-Month, Year-to-Year

Inflationary Recession Continues to Intensify

Broad Outlook Unchanged

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Monthly July M3 Gained $81 billion. In the last several days, I have received a large number of subscriber requests for comment on monthly M3 growth, given a popular-media story of a private estimate out in the U.K. of a $50 billion monthly contraction in July U.S. M3 money supply. Based on my regular estimation of ongoing M3, no such contraction took place in the series as traditionally defined by the Federal Reserve (methodology discussed in the August 2006 SGS Newsletter); to the contrary, monthly M3 increased by roughly $81 billion.

As reported in last week’s newsletter (August 13th, page 31), the Shadow Government Statistics Ongoing M3 estimate for July 2008 increased by roughly $71 billion from June, a number that subsequently has revised to about $81 billion, based on the latest week’s Fed reporting. That estimate is for the month-to-month change in the seasonally-adjusted, monthly-average M3. For the month, the largest M3 component increase was in M2, reported up by $38.9 billion per the Fed. The other M3 component that still is published fully by the Fed — institutional money funds — was shy of flat, with an $800 million monthly contraction. Large time deposits, repos and Eurodollars — all modeled to a certain extent with a backing in other Fed reporting — increased for the month….

JOHN WILLIAMS’ SHADOW GOVERNMENT STATISTICS