Money market deposit accounts continued to defy all projections by climbing to $147 billion in the week ending January 12, according to the Federal Reserve. That was an increase of $28.4 billion over the previous week. At the same time, Super NOW accounts took in $8.3 billion during their first week of existence.
The advent of the super NOW accounts was partly responsible for a large $6.9 billion increase in the measure of the money supply known as M1 for the week ended Jan. 12. M1 rose to a seasonally adjusted average of $484.6 billion from $477.7 billion. In the latest 13 weeks, M1 averaged a 15.9 percent rate of gain.
Already acknowledged as the most successful new account ever, the Super NOWs--federally insured savings and checking accounts paying market rates of interest--rapidly are replenishing the coffers of banks and savings institutions at the expense of money market mutual funds. Fund assets declined again this week for the seventh straight time. According to the Investment Company Institute, they now total $201.8 billion, down from the record of $232.3 billion set Dec. 1.
A survey by Market Facts of Chicago indicates that 47 percent of consumers' deposits to money market accounts were drawn from seven-day to three-month certificates of deposit. This relieves some of the pressure on institutions that would face a significant increase in the cost of funds if the funds were to come primarily from passbook accounts paying just over 5 percent.