Newspaper article THE JOURNAL RECORD

Weekly Money Supply `Yawns' Reflects Economic Environment

Newspaper article THE JOURNAL RECORD

Weekly Money Supply `Yawns' Reflects Economic Environment

Article excerpt

NEW YORK - In days gone by, Bill Oberdorf would stay on the telephone with his broker between 4:10 and 4:30 one afternoon each week.

The Newark, N.J., lawyer and many, many other private investors wanted to get immediate word on what the nation's money supply had done in the latest reporting week.

Many billions of investment dollars moved depending almost solely on how much the money measure known cryptically as M1 went up or down, and how its behavior was interpreted in terms of inflation, interest rates and overall economic activity. M1 represents cash and other funds readily available for spending, such as deposits in checking accounts.

The Federal Reserve Board reports money supply figures on Thursday afternoons. For a period between 1980 and mid-1984, the Fed put the numbers out on Fridays, keeping eager money watchers waiting until the end of the week for the data.

""It was the big event of the week two to three years ago,'' said Arnold X. Moskowitz, senior vice president and economist with the investment firm Dean Witter Reynolds Inc. in New York.

The Fed takes a dim view of over-emphasizing weekly gyrations in M1.

Richard H. Hoenig, an assistant vice president for public affairs at the Federal Reserve Bank of New York, said the central bank has consistently cautioned against reading too much significance into one week's numbers because of the ""statistical noise'' that routinely occurs in preliminary data.

The Fed has advised that the trends in money supply growth, looked at over time, and after revisions, are far more meaningful, Hoenig said.

Recently, the weekly monetary reports often elicit yawns.

That reaction, analysts say, largely reflects the transformation of the economic environment.

Maria Ramirez, a bond market analyst with Drexel Burnham Lambert Inc. in New York, said banking deregulation is the biggest reason why M1 no longer commands as much importance.

Deregulation, which spawned the creation of the new types of interest-bearing checking accounts, caused a flood of people's savings to come into the M1 calculation. …

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