The Beige Book may not be a page-turner on your spring reading list, but when it comes out Wednesday, economists will read it closely to get a more up-to-date sense of what’s happening in this economy.
What exactly is the Beige Book? And is it maybe a bit more colorful than the name suggests?
You could call the Beige Book an anthology, with each of the 12 Federal Reserve districts writing their own chapter. Emily Kerr, an economist at the Federal Reserve Bank of Dallas, said the Beige Book — which is more of a Manila-ornate PDF these days — is indeed alive.
“The purpose of writing and compiling, and especially publishing, is to add color to what’s happening in business,” Kerr said.
The data comes from phone calls and surveys with bankers, industry leaders and others that include questions like, “How is your attitude different now than it was six weeks ago? How about your outlook?” Kerr said. “If you produce, what about your production? If you are a retailer, how are your sales doing?”
So what does the Beige Book highlight in a barrage of hard economic numbers?
“A lot of the data we get on the economy is just lagging behind,” said Bill English, a Yale finance professor and a former Fed official. The Beige Book offers a more direct picture of what the English say is handy for setting interest rates. “It’s the timeliness that makes this potentially valuable.”
He believes the Fed will be particularly interested in the information the Beige Book is gathering about bank lending this round. And the report isn’t just useful for the Fed, said Ren Zhang, an economics professor at Texas State University.
“Investors can also read the Beige Book and see, OK, the Fed’s assessment of the current state of the economy,” he said.
But the Beige Book has its limitations, Zhang said. Its relevance fades after a few weeks. In contrast to great works of literature, the Beige Book has a relatively short shelf life.
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