U.S. Money Supply Has Made History Twice in the Last 3 Years -- Including a First Since the Great Depression -- and It Foreshadows a Wild Ride for Stocks in 2026
The U.S. stock market could face a turbulent year in 2026, with historical trends suggesting a rocky ride ahead. Recent shifts in the M2 money supply—a key measure of cash, deposits, and easily convertible assets—point to potential instability for Wall Street and the broader economy.
Over the past three years, the U.S. M2 money supply has swung dramatically, hitting extremes not seen in over a century. Between April 2022 and October 2023, it dropped by 4.76%, the first decline of more than 2% since the Great Depression. Such sharp falls have only occurred four times in 156 years, and each instance coincided with economic depressions and severe market downturns.
By October 2025, the M2 supply rebounded to an all-time high of $22.298 trillion, up from $22.212 trillion the previous month. This follows a 3.49% increase last year, with growth now pacing around 4% annually. Yet even this modest rise—on the lower end of historical averages—has raised concerns. Past data shows that M2 growth between 1% and 4% often precedes economic troubles or stock market declines. The outlook for 2026 remains uncertain, with additional risks looming. A divided Federal Reserve, stretched stock valuations, and potential fallout from trade policies could further expose market vulnerabilities. The possibility of speculative bubbles in AI and quantum computing adds to the unease, leaving investors bracing for possible volatility.
The latest M2 figures place the U.S. economy in uncharted territory, with growth rates that have historically signalled trouble. As 2026 approaches, analysts warn that a mix of monetary trends and external pressures may create a challenging environment for stocks. The coming months will reveal whether history repeats itself or if new factors reshape the financial landscape.
