This chart shows the year-over-year changes in the M1 Velocity of Money (defined as nominal GDP divided by M1), in relation to the S&P 500.
Note that the Velocity of Money slows during recessions, and the slowdown can linger for many months.
Click here to see a chart for the M2 Velocity of Money.
M1 : Equals the Monetary Base (M0), plus checkable deposits and traveler's checks (assets that can be used to pay bills and debts).
M2 : Equals M1, plus savings deposits, money market deposits, and time deposits less than $100,000. For many, M2 is the figure to watch in forecasting inflation.
M1 Velocity of Money Chart
( HINT: Click-and-drag left-to-right on the top chart (S&P 500) to zoom in to a specific date range. Double-click on S&P 500 chart to zoom back out. )