money supply (M2)

A key economic indicator that represents the aggregate total of all money the U.S. has in circulation at a specific point in time. Released by the Federal Reserve monthly, the M2 money supply takes into account most liquid forms of money, such as demand deposits, and other liquid deposits and also includes small-denomination time deposits and retail money market funds. The Fed uses M2 data to assess current economic and financial conditions, and to help alter its monetary policy. Economists and others also use M2 data to predict cyclical economic recessions and recoveries and expected changes in stock prices—not to mention expected changes in the Fed's monetary policy.