M1 money supply is a leading economic indicator because it provides valuable information about the amount of money in circulation and can be used to gauge changes in consumer spending and overall economic activity. M1 money supply refers to the total amount of currency in circulation, plus checking account balances and other highly liquid assets that can be easily converted into cash.

An increase in M1 money supply suggests that there is more money available for consumer spending, which can lead to increased economic activity and growth. Conversely, a decrease in M1 money supply indicates that there is less money available for consumer spending, which can lead to decreased economic activity and growth.

Changes in M1 money supply can also have a ripple effect on other sectors of the economy. For example, an increase in M1 money supply can lead to an increase in demand for goods and services, which can benefit industries such as retail, hospitality, and transportation.

Furthermore, M1 money supply can also serve as an early warning sign for changes in the economy. For instance, if M1 money supply suddenly decreases, it may suggest that a recession or economic slowdown is imminent.

Overall, M1 money supply is a valuable leading indicator because it provides valuable insights into the level of consumer spending and overall economic activity, which are critical factors in determining the health of the economy.