Velocity of M1 Money Stock
M1V • Economic Data from Federal Reserve Economic Data (FRED)
Latest Value
1.62
Year-over-Year Change
29.78%
Date Range
1/1/1959 - 4/1/2025
Summary
The Velocity of M1 Money Stock measures how quickly money circulates through the economy, indicating the rate at which one unit of currency is used for transactions. This metric provides insights into economic activity, spending patterns, and potential inflationary pressures.
Analysis & Context
This economic indicator provides valuable insights into current market conditions and economic trends. The data is updated regularly by the Federal Reserve and represents one of the most reliable sources for economic analysis.
Understanding this metric helps economists, policymakers, and investors make informed decisions about economic conditions and future trends. The interactive chart above allows you to explore historical patterns and identify key trends over time.
About This Dataset
Velocity represents the number of times a unit of currency is exchanged for goods and services within a specific time period, typically a year. Economists use this indicator to understand the relationship between money supply and economic output, with higher velocity suggesting increased economic transactions.
Methodology
The Federal Reserve calculates M1V by dividing nominal GDP by the M1 money supply, tracking the frequency of money exchanges in the economy.
Historical Context
Policymakers and central banks analyze money velocity to inform monetary policy decisions and assess overall economic health.
Key Facts
- Velocity can indicate economic efficiency and liquidity
- Low velocity may suggest economic slowdown or reduced consumer spending
- Dramatic changes in velocity can signal significant economic shifts
FAQs
Q: What does a declining money velocity mean?
A: A declining velocity typically indicates reduced economic activity, with money circulating less frequently through transactions. This can suggest lower consumer confidence or economic stagnation.
Q: How does money velocity relate to inflation?
A: Money velocity can be a predictor of inflationary trends, as increased circulation often correlates with potential price increases and higher economic activity.
Q: How is M1V different from other economic indicators?
A: Unlike static measures, M1V captures the dynamic movement of money through the economy, providing a more nuanced view of economic performance beyond simple monetary aggregates.
Q: Can money velocity predict economic recessions?
A: Significant changes in money velocity can be an early warning sign of potential economic downturns, though it should not be used in isolation for forecasting.
Q: How often is M1V data updated?
A: The Federal Reserve typically updates M1V quarterly, allowing economists and analysts to track ongoing economic trends and monetary dynamics.
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Citation
U.S. Federal Reserve, Velocity of M1 Money Stock [M1V], retrieved from FRED.
Last Checked: 8/1/2025