What is the Beige Book?
The Beige Book is a report that offers a snapshot of business conditions in each of the Fed’s 12 regional Reserve Bank Districts. Each District compiles an individual report based on the economic conditions in their region. It is one of multiple documents that the Federal Open Market Committee (FOMC) participants use to understand current economic conditions and to influence monetary policy decisions across the U.S. The Beige Book’s official title is “The Summary of Commentary on Current Economic Conditions by Federal Reserve District".
The FOMC is a 12-member committee made up of seven members of the Board of Governors; the president of the Federal Reserve Bank of New York; and on a rotating basis, the presidents of four other Reserve Banks. Monetary policy is a set of tools that the Fed uses to achieve price stability and low unemployment.
What information do we collect?
Each regional Reserve Bank District collects information on various topics relevant to their district, which may include topics from labor markets to pricing.
The Kansas City Fed section of the Beige Book typically covers eight topics: labor markets; prices; consumer spending; manufacturing and other business activity; real estate and construction; community and regional banking; energy; and agriculture.
- Labor markets: Contains information regarding the state of employment such as hiring and wages, and comparisons to different industries such as arts and entertainment, healthcare, and manufacturing.
- Prices: Assesses price changes in input and raw materials (e.g. steel, oil, corn, grain, and lumber). Inputs are the resources a business uses in creating goods and services like labor hours, equipment, real estate expenses, and transportation. It also looks at prices paid by customers.
- Consumer spending: Discusses the demands for goods and services (retail stores, car dealers, hotels, attractions, restaurants), and whether sales have increased or decreased.
- Manufacturing and other business activity: Analyzes changes in manufacturing activity (creating transportation vehicles, computers, clothing, and household goods) as well as changes in business plans and investments.
- Real estate and construction: Reviews conditions in residential and commercial real estate (new homes, existing home sales, home maintenance, commercial land development and leasing).
- Community and regional banking: Observes credit and loan type, demand, and amount across segments like commercial and industrial and residential mortgage. It also discusses credit conditions and risks, assessing people’s ability to pay back loans.
- Energy: Elaborates on energy and mining including renewable energy investment and employment in the sector.
- Agriculture: Addresses growing conditions and livestock. This includes the price of products, farm incomes, farmland values, and agricultural credit conditions.
How do we collect information for the Beige Book?
Each regional Reserve Bank District differs in how they collect information. It can be through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources.
For example, the Kansas City Fed collects information using a number of tools. They conduct multiple surveys (from agriculture to energy) with business contacts and collect observational information from other sources like Board of Directors meetings and roundtable discussions.
Overall, each version of the Beige Book is an evaluation of changes to the current state of the U.S., which may include unemployment rate and inflation, compared to the previous policy cycle (or previous Beige Book).
Why does the Beige Book matter to the Fed?
The Beige Book provides a more detailed “on the ground” or regional perspective for those districts which the Fed would not have otherwise on a national level. This leads to making more better, informed policies on interest rates and stance on monetary policy. To make monetary policy decisions, the Federal Reserve needs to collect information about the economy throughout the country.
Why does the Beige Book matter to you?
It shows the everyday person that their voice is being heard and is included in the larger monetary policy discussion. The Fed is collecting data from individual states and regions rather than solely using national data. When the FOMC decides on monetary policy using information from the Beige Book, they are considering the unique circumstances in your region as the various policies will affect each region differently.
Who writes the Beige Book?
All 12 regional Reserve Bank Districts are involved in the production of the Beige Book.
Where is the Beige Book published?
When is the Beige Book published?
The Beige Book is published eight times per year before the FOMC meetings (January, March, April, June, July, September, October, December).