Excerpt from CNBC quoting DataTrek’s Nick Colas:
…. “Annual growth of US cash in circulation always peaks at the start of economic cycles,” Nick Colas, co-founder of DataTrek Research, said in his daily report.
This was the case in 1983, when the U.S. was heading out of its inflation-induced recession; 1991, as the country was coming out of a downturn; 2002 following the hangover from the dot-com bust; and 2009 as the financial crisis was coming to an end.
Using M1 – a country’s basic money supply – as the yardstick, those years saw respective circulation growth of 9.6%, 10.2%, and 9.8% in both 2002 and 2009.
“While this may be a quirky indicator, it has a solid history of marking economic turning points,” Colas wrote. “In all the buzz about how the pandemic economy favors virtual money over physical cash, it is worth noting that demand for the latter is at Y2K levels and higher than any other recession. This gives a fresh perspective to the idea of ‘cash on the sidelines,’ and one that should foretell improved US consumer spending in the months to come”….
Read the full article here on CNBC!