U.S. MONEY VELOCITY FELL AGAIN IN THE THIRD QUARTER OF 2019: IS IT TIME FOR FISCAL POLICY?

As expected [see my previous blog entry (https://harrisonhartman.blogspot.com/2019/10/money-velocity-forgotten-variable.html) and my tweet (@HarrisonCHartm1), both from October 28, 2019], data accessed today from the Saint Louis Federal Reserve web page FRED (https://fred.stlouisfed.org/data/M1V.txt and https://fred.stlouisfed.org/data/M2V.txt) shows that the velocities of the M1 money supply and the M2 money supply in the U.S. fell again last quarter, the third quarter of 2019.  After a short-lived rebound, U.S. M1 velocity has now decreased in three out of the last four quarters.  Additionally, the velocity of M1 in the U.S. is only about 52 per cent of its value at its peak (at least in the quarterly data sample period) in the fourth quarter of 2007, just one quarter before real GDP started to fall with the onset of the Great Recession in the U.S.  However, with its value from the third quarter of 2019, the velocity of U.S. M1 exceeded its values from the last three quarters of 2017 and the first quarter of 2018.

It is NOT certain that the U.S. economy will enter another recession soon.  But if it does, then how helpful will expansionary monetary policy be in stimulating the economy?  Will policymakers use expansionary fiscal policies to provide people with purchasing power in ways that are likely to increase spending -- and velocity?