The Beige Book: Timely Information on the Regional Economy

Donna K. Ginther and Madeline Zavodny
Economic Review, Vol. 86, No. 3, 2001

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In making monetary policy, the Federal Open Market Committee (FOMC) relies in part on the Beige Book, a report on regional economic conditions released publicly about two weeks before each FOMC meeting. The Beige Book summarizes economic conditions in each of the twelve Federal Reserve districts and provides an overview of national conditions based on the regional reports.

The Reserve Banks gather information for their regional summaries from a variety of sources, including telephone and written surveys, local news reports, and reports on current and expected economic conditions from the Reserve Banks' boards of directors. Some critics consider this type of anecdotal information too subjective to be of much value. However, recent research applying quantitative methods to Beige Book information shows that the reports provide a useful indicator of national and regional economic activity.

This article evaluates the relationship between the Sixth District (Atlanta) Beige Book and regional and state per capita employment, real personal income, and real gross state product growth. The analysis also compares the Atlanta Beige Book to next-quarter estimates of economic activity and examines whether it contains information about regional economic activity in addition to that contained in the national Beige Book summary. The authors find that, despite the Beige Book's anecdotal nature, the report provides timely, reliable information when actual data are not yet available, giving policymakers an early indication of the direction of the economy that helps them make informed decisions.

September 2001