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
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
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
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
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
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.
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
- 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.
The Federal Reserve Board. 2004. “The Beige
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.
Yücel, Mine K. and Nathan Balke. 2001. “What’s the
Beige Book?” Regional Economy, Federal Reserve Bank of Dallas.
“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.