Definition
The broad US money supply measure including cash, checking deposits, savings, and money market funds. M2 growth fuels asset prices; contraction creates headwinds.
M2 is tracked via FRED series WM2NS (weekly). It peaked at $21.7T in early 2022, then contracted by ~$900B — the first YoY decline since the 1930s. This contraction coincided with the 2022 bear market. M2 is shown as an observational indicator (not in DLI scoring) — kept outside the composite to avoid double-counting Fed balance sheet effects. Historical range: $15T–$22T. Typical YoY growth: 2-7%. The COVID expansion of +41% was historically unprecedented.