Part 7/11:
Further complicating the economic picture is the velocity of money—a measure of how quickly money circulates throughout the economy. Wood observes that this velocity has been in decline since the early 2000s, a trend exacerbated by the pandemic. Although there was a temporary bounce back, the velocity is beginning to fall once again, suggesting tighter conditions for money growth. Should this decline continue, the implications for nominal GDP growth and real economic activity could be significant.