Beige Book

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Definition:
A summary of economic conditions around the United States compiled for the Federal Reserve Board. Each Federal Reserve Bank gathers anecdotal information on current economic condition in its District through reports from Bank and Branch directors and interviews with key businessmen, economists, market experts, and other sources. The Beige Book summarizes this information by District and sector. This report allows outsiders to know what the Fed governors are looking at as they prepare for their upcoming FOMC meeting.


Contents

Importance

The Fed uses this report, along with other indicators, to determine interest rate policy at FOMC meetings. The Beige Book is considered a valuable tool, acting in essence as a general gauge on the overall strength of the economy, it is even considered that occasionally it can have the power to shift market reactions if the findings represent a significant enough deviation from current analyst expectations.

It must be remembered, however, that the report does not actually provide a clear view of what the FOMC members think about the economy, but instead presents a series of economic facts concerning the various districts. It is also worth bearing in mind that while these facts may be accurate, they appear in the form of descriptive information, not as a break down of the actual data itself.


If the Beige Book portrays inflationary pressure, the Fed may raise interest rates, which is dollar bullish.

If the Beige Book portrays recessionary conditions, the Fed may lower interest rates, which is dollar bearish.

Background

Two weeks before each FOMC meeting, the Fed releases the Beige Book so called due to its tan cover. It provides current information on eocnomic conditions around the United States. This book is given to each FOMC member. The Beige Book is not a collection of statistical data. It is compliation of anecdotal information from each of the 12 Federal Reserve Districts and is based on interviews with local businesspeople and academics who are surveyed about the econcomic health in their region.

Source

Federal Reserve Board

Availability

It is released at 2:00pm EST two Wednesdays before each FOMC meeting.

Frequency

Eight times a year.

Revisions

None.

Additions

The 'Beige Book' is the informal name given to the report issued by the Federal Reserve, the full name for the Beige Book report is actually "Summary of Commentary on Current Economic Conditions by Federal Reserve District".

The Beige Book is released eight times a year, two Wednesdays prior to each FOMC (Federal Open Market Committee) meeting and is a key tool in advising the members on changes that have occurred within the economy since the last meeting.

Essentially, the Beige Book is a compilation of data gathered from each District within the Federal Reserve and is a mixture of anecdotal evidence on current economic conditions in the district gained through reports from various bank directors and also interviews with economists and market experts, along with other sources. The Beige Book report presents this information in the form of summaries by both district and sector.

Links

Federal Reserve Board - Official Website
Beige Book news release


Related Articles:

Beige Book Blues

Beige Book: No Need for QE3?

Fed: More Action or None at All?

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