What is the Beige Book?
Each Federal Reserve bank gathers information about economic conditions in its district through a network of contacts. Prior to each of the eight scheduled Federal Open Market Committee (FOMC) meetings, this anecdotal survey information (reported by district and sector) is compiled into the Summary of Commentary on Current Economic Conditions, commonly known as the Beige Book because of its plain beige cover.
Who puts the Beige Book together?
The 12 district reports are gathered by one of the 12 Reserve banks on a rotating basis. That bank's staff prepares the national summary of economic conditions.
Is the information in the Beige Book made public?
The information can be found on the Federal Reserve Board's web site at http://www.federalreserve.gov/fomc/beigebook/2002/default.htm and is also reported by the news media on each release date.
Why is the information in the Beige Book valuable?
Anecdotal information can be used to confirm or to help understand ongoing trends that arise from formal data or to identify emerging trends. Regional information may provide insight into the business cycle if the economy is experiencing a "rolling recession" that bottoms out in different regions at different times. Also, the Beige Book can help develop a picture of state and regional economic conditions, for which there is less data than for national trends. In addition, some one-time events, such as Y2K and the terrorist attacks of 9/11, do not fit into formal economic models. Talking with business leaders to discern their plans provides information about the economy's reactions to such events.
Why doesn't the Fed rely strictly on formal data?
The Fed's basic picture of the economy does come from formal data published by statistical agencies. Unfortunately, the formal data lag current economic conditions. Anecdotal information helps the Fed to see what is going on in the economy almost as it is happening. Also, because this information is collected from the people who are actually making day-to-day business decisions, it helps the Fed understand why trends in the data are occurring.
The content for Q & A was adapted from "Color Me Beige" which was written by Howard J. Wall, research officer at the Federal Reserve Bank of St. Louis, and appeared in the February 2002 issue of National Economic Trends, a St. Louis Fed publication, and "The Role of Anecdotal Information in Fed Policymaking", a speech delivered Feb. 13, 2002, by William Poole, president and CEO of the Federal Reserve Bank of St. Louis.