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The Federal Reserve Bank of San Francisco

Ask Dr. Econ

November 2003

What is the Beige Book, and what role does it play in setting interest rates for monetary policy?

We’ve been waiting for this question! Here is the short answer describing the Beige Book from the Board of Governors of the Federal Reserve System’s web site. This is the same site you should use to find current and historic national and regional Beige Book survey results:

Summary of Commentary on Current Economic Conditions
by Federal Reserve District

Commonly known as the Beige Book, this report is published eight times per year. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources. The Beige Book summarizes this information by District and sector.


Beige Book and the Federal Open Market Committee
The Beige Book is one of the many inputs to the Federal Open Market Committee (FOMC) that helps the Committee to formulate monetary policy—mainly through adjustments to the federal funds interest rate target.
At FOMC meetings Reserve Bank presidents often may cite Beige Book findings to help describe current economic conditions in their District. The FOMC members also review the national summary to get recent anecdotal information on economic conditions that may be helpful in evaluating the current and future performance of the economy. Findings reported in the Beige Book also are routinely covered by the media.

Beige Book Survey summaries are published eight times per year by the Federal Reserve Board of Governors; the paper version of the publication indeed does have a beige cover. The Beige Book is typically released to the public on Wednesday, about two weeks before each scheduled FOMC meeting.

The Beige Book Cycle
The Beige Book cycle typically begins about six weeks before each scheduled FOMC meeting. Each Federal Reserve Bank prepares a survey for their contacts. Survey respondents typically are asked to focus their comments on current economic topics and on conditions they have observed since the last FOMC meeting. As the Board web site notes, contacts may include Reserve Bank and Branch directors, and a broad array of business contacts, economists, and market experts. Contacts typically report on recent developments in industries they are familiar with from their own business, labor, nonprofit, or educational activities; they also report on economic conditions in their state and or regional geographic area. Individual survey results for each District are evaluated and summarized by Reserve Bank economists. A national survey that provides a broad overview of recent national economic conditions is prepared from the twelve Reserve Bank summaries.

Value Added
The Beige Book provides an up-to-date supplement to the many statistical data series that economists and FOMC members use to analyze regional and national economic conditions. The Beige Book provides recent anecdotal information on current economic conditions; this is important since many of the key regional economic statistics—personal income and gross state product are two examples—are only released after a significant lag.

Publication of the Beige Book is timed to the FOMC meeting schedule. The survey gathers information in the weeks between FOMC meetings. The survey format also has other positive features—surveys may be focused to address key economic issues that may change from survey to survey and may vary across Districts—the latter feature can be a plus if it reflects differences in economic structure, issues, and conditions across Districts.

Limitations too!
However, the survey format also has limitations. Former Fed Vice Chairman Alan Blinder once described the Beige Book survey as an “ask your uncle” survey, because it is not conducted as a scientific survey. The survey employs different contacts and methods, questions vary across Districts, and even the timing may differ slightly. In addition, there is the potential for news reports and events to influence respondents’ perceptions of regional economic conditions.

It is important to remember that the Beige Book summaries are a complement—not a replacement—for the quantitative statistical data on employment, unemployment, personal income, retail sales, and real estate markets that are often used to analyze regional and national economic conditions. However, since the Beige Book survey covers a recent period—the weeks since the prior scheduled FOMC meeting—and is available nearly two weeks before each FOMC meeting, the Beige Book typically will contain fresh information that is more current than the data that are available from many of the regularly collected and published economic statistics. As such, the Beige Book is generally considered a useful tool for policymakers.

Big Picture and Key Sectors
Not only do the National Summary and the District Summaries provide an overview of economic conditions, they also include information on key sectors and industries. For example, in the Twelfth Federal Reserve District, the survey results are typically organized to begin with an overview that is followed by paragraphs that report on conditions in the following key sectors and industries:

  • Prices and Wages
  • Retail Trade and the Services
  • Manufacturing
  • Real Estate and Construction
  • Agricultural and Resource-related Industries
  • Financial Services

So, before the next FOMC meeting, just like the FOMC policymakers, you may want to take a look at the Beige Book to gain insights into recent developments in the national economy and in key sectors and industries of your regional economy.

Additional Resources:

The Federal Reserve Board. 2004. “The Beige Book.”
Available at:
http://www.federalreserve.gov/fomc/BeigeBook/2004/

Ginther, Donna K. and Madeline Zavodny. 2001. “The Beige Book: Timely information on the regional economy.” Economic Review, Federal Reserve Bank of Atlanta, 3. Q3,2001.
Available at:
http://www.frbatlanta.org/frbatlanta/invoke.cfm?objectid=227E9A85-9568-11D5-898300609459DBE6&method=display_body

Yücel, Mine K. and Nathan Balke. 2001. “What’s the Beige Book?” Regional Economy, Federal Reserve Bank of Dallas. March.
Available at:
http://dallasfed.org/eyi/regional/0104beige.html

“U.S. Monetary Policy: An Introduction, Part 1: How is the Fed structured and what are its policy tools?” FRBSF Economic Letter, Federal Reserve Bank of San Francisco. 2004-01; January 16, 2004.
Available at:
http://www.frbsf.org/publications/economics/letter/2004/el2004-01.html