It is evident that real GNP and prices dropped significantly in line with the decline in M2, and recovered steadily with the increase in M2. Then, in 1937, real GNP and prices declined again as M2 decreased, showing that it was a failure to exit from monetary easing too early.
Despite strong growth in consumption spending, gross domestic product (GDP) grew modestly at an annual rate of 1.1 percent in the first quarter of 2023 as inventory investment slowed down substantially, similar to the below-trend pace of growth in 2022. Looking ahead, last quarter's growth in consumer spending seems unsustainable.