The following is a hypothetical snapshot of six months in a small Midwestern town: A banker decides to open a branch office in a neighboring town. A factory has to cut its labor force. A farmer has a mixed growing season. A residential real estate firm reduces prices to sell more of its inventory.
Those stories by themselves are mere anecdotes. But anecdotal information from people who make day-to-day business decisions is extremely useful to the Federal Reserve because such information helps us clearly see what is happening in the economy and understand what fluctuations in formal data may mean.
When the Federal Open Market Committee (FOMC) meets, the Fed's Board of Governors and Reserve bank presidents give their views on the economic outlook. In crafting monetary policy, the FOMC consults several formal and informal sources-which include anecdotes. Among the sources we use in the Eighth District are:
Economic forums. We invite bankers, business owners, academics, community leaders and others to these networking forums. While the primary internal Fed "audience" is St. Louis Fed President Bill Poole, I often participate in these forums as well to gain a better understanding of the communities in our Fed region to ensure that the forums are designed and facilitated in a manner that provides Mr. Poole with the best information possible.
Industry councils. We established these councils this year to acquire high-level reports on the agribusiness, health care, real estate and transportation industries in the Eighth District. Leaders in those industries meet with Mr. Poole to discuss trends and issues in their respective business sectors.
Business leader luncheons. We often invite business leaders to a lunch with Mr. Poole and some of our senior officers and economists. One of the purposes is a mutual exchange of information on the local/regional economy.
Beige Book input. The Beige Book is published two weeks before each FOMC meeting. It's a closely watched document of economic trends based on information and data gathered from reliable sources throughout the nation, including Mr. Poole's sources in the Eighth District.
Boards of directors. Finally, we have our boards of directors, each of which is familiar with the economic and credit conditions in the District and provides Mr. Poole with information on a monthly basis. We have the board of directors for the St. Louis office (nine members), and also for each of our three branch offices (seven members each).
Bankers in the Eighth District are integrally involved in these activities including our economic councils and our boards of directors. Without the anecdotal information that you and others provide, we're left with raw data-which can tell us only so much. Your assistance makes the raw data breathe, and helps the Fed and FOMC make informed decisions.