Federal Reserve Adjusts M2 Money Supply Calculation

The Federal Reserve has adjusted its calculation of a key measure of the U.S. money supply. As of June 2026, the M2 monetary aggregate totaled $23 trillion.

The change, effective July 28, 2026, alters how Individual Retirement Account (IRA) and Keogh retirement account balances are treated within the M2 data. These balances are now subtracted from the total value of M2, rather than from the individual values of two of its components: small-denomination time deposits and retail money market funds. According to the Federal Reserve Bank of St. Louis, this methodological shift had almost no impact on the total value of M2 but did result in the recalculation of those two component values.

Components of the M2 Money Supply

M2 measures the amount of money readily available in the economy, encompassing funds that can be easily converted to cash. The measure includes several components. M1, which includes cash and checking and savings accounts, forms its core. Two other components are small-denomination time deposits and retail money market funds. The total value of IRA and Keogh retirement account balances is subtracted from the measure because these funds carry large penalties for pre-retirement withdrawals and are not considered liquid.

Reason for the Reporting Change

The adjustment was prompted by evolving financial behavior. Surveys by the Board of Governors of the Federal Reserve System in recent years showed a growing share of IRA and Keogh balances held at banks were sitting in savings and checking-type accounts. This shift, rather than in traditional time deposits or money market funds, made the previous method of subtraction less accurate for depicting the underlying components. The Federal Reserve's H.6 statistical release, the weekly Money Stock Measures report, now reflects this new calculation.

Accessing Historical Data

Historical data showing the values before and after this reporting change are available. The Federal Reserve's ALFRED database stores vintages of data, allowing users to see the historical values for both small-denomination time deposits and retail money market funds. As a result of the recalculation, both of these data series now show higher values than they did under the previous methodology.

Another component, saving deposits, was reclassified from M2 into M1 in April 2020. The Federal Reserve Bank of St. Louis notes this earlier regulatory change is why its illustrative graph does not show the value of saving deposits within M2 past that date. The recent adjustment continues a pattern of refining monetary measurement to reflect how Americans hold their money.