In August, the monetary base was $4.807 trillion, which was a slight increase from last month. Compared with one year ago, August’s monetary base was up 47.0%.  This was the fifth consecutive month that the month-over-month rate of change was faster than 44%. (In 2009, the monetary base increased more than 100% five times in the first eight months of the year.) This was the ninth month in a row of month-over-month growth. The annual rate of growth accelerated to 20.1% in August, which was the fifth straight month of accelerating growth and the fastest rate of growth since December 2014.

Historically, the annual rate of change in the monetary base leads capital equipment consumption, specifically machine tool orders, by 12-18 months. Although, the lead time between the monetary base and capital equipment consumption shrunk over the last decade. 

The recent rapidly accelerating growth in the monetary base should eventually lead to accelerating growth in machine tool orders and capital equipment in general. Based on the historical relationship, machine tool orders should bottom sometime between September 2020 and February 2021.