What is the Fed Beige Book?
The Fed Beige Book, also referred to as the “Summary of Commentary on Current Economic Conditions,” is a qualitative report outlining current U.S. economic conditions across the 12 Federal Reserve districts. It is published eight times a year by the U.S. Federal Reserve.
- The Fed Beige Book is a qualitative report outlining U.S. economic conditions.
- The report collects information through surveys and interviews with businesses, community organizations, economists, market experts, and others.
- The Fed Beige Book is one of many resources used by the Federal Reserve when discussing adjustments to their monetary policy.
Understanding the Purpose of the Fed Beige Book
The Fed Beige Book is used by the Federal Reserve to understand current economic conditions and to identify trends in the national economy that may not be reflected in available economic data (such as the unemployment rate, personal income, retail sales, etc.).
The Fed Beige Book acts as a complement to available economic data. It is essential in helping the Federal Open Market Committee (FOMC) formulate their monetary policy, such as whether to adjust the federal funds rate.
What Type of Report is the Fed Beige Book?
Although the Fed Beige book is an economic report, it contains very little quantitative data. Instead, the report is primarily qualitative because the information is gathered through surveys and interviews with businesses, community organizations, economists, market experts, and others.
In other words, it provides anecdotal information on current economic conditions.
Layout of the Fed Beige Book
The structure of each publication of the Fed Beige book can be explained by segmenting the report into three main sections:
- National Summary – Discusses nationwide economic activity, employment and wages, and prices. This is the “big picture” view on overall US economic conditions and spans one page.
- Highlights on Each Federal Reserve District – Summarizes the economic conditions currently faced by each Federal Research district and spans one page.
- Detailed Discussion on Each Federal Reserve District – Discusses current economic conditions in each Federal Reserve district in greater detail, comprising 24 pages (two pages per Federal Reserve district).
Different districts do not always discuss the same topics. Still, the most common topics include employment and wages, consumer spending, business spending, manufacturing, construction and real estate, banking and finance, and agriculture.
How can the Fed Beige Book Impact Monetary Policy?
The Fed Beige Book is one of many resources used by the Federal Reserve when discussing adjustments to their monetary policy.
- If it discusses notable price increases across several districts, this may aid the opinion of a contractionary (hawkish) monetary policy to control potential runaway inflation.
- If it reports a sluggish economy, this may aid the opinion of an expansionary (dovish) monetary policy.
The Fed Beige Book is also carefully dissected by market participants to gain an understanding of how the Federal Reserve may change its monetary policy at its FOMC meeting.
Timing of Publication for each Fed Beige Book
The Fed Beige Book is published two weeks before each scheduled FOMC meeting. Given that there are eight scheduled FOMC meetings per year, eight Fed Beige Book reports are published per year. It is common for committee members to cite the Fed Beige book during their scheduled FOMC meetings.
Key Limitation of the Fed Beige Book
The Fed Beige book collects information through surveys and interviews. As a result, it is not a scientific survey, and responses from participants may be influenced by news headlines and not actual observations. It’s been commonly described as the “Ask Your Uncle” approach to understand what is impacting the U.S. economy.
What are the 12 Federal Reserve Districts?
The 12 Federal Reserve districts, and the regions covered by each, are outlined below.
CFI offers the Certified Banking & Credit Analyst (CBCA)® certification program for those looking to take their careers to the next level. To keep learning and developing your knowledge base, please explore the additional relevant resources below: