QUICK LINKS Beige Book (Federal Reserve Board) What Is the FOMC? (FRB Minneapolis) RELATED ARTICLES "What Economic Information Does the Fed Have That the Market Doesn't?" Remarks before the American Copper Council, El Paso, Texas, April 26, 2001 (Text) "Evaluating the Eleventh District's Beige Book," Economic and Financial Review, 4Q 2000 (Text or PDF) "The Federal Reserve's Beige Book: A Better Mirror Than Crystal Ball," FRB Minneapolis, The Region, March 1999 (Text)

Regional Economy
What's the Beige Book?

Dallas Fed economists explain the Beige Book and analyze how well it tracks the regional economy.

The Federal Reserve’s Federal Open Market Committee (FOMC) relies on information about national and regional economic conditions in formulating policy. However, up-to-date regional statistics are not readily available at the time of the FOMC meeting. Because regional statistics are produced with a lag—sometimes as long as two years—Federal Reserve policymakers rely on the Beige Book for information about the current state of the regional economies.

The Beige Book is an anecdotal report on economic conditions drawn mainly from surveys of businesses in the 12 Federal Reserve districts and released approximately two weeks before each FOMC meeting. Each Reserve Bank is responsible for reporting on economic conditions within its district.

The Dallas Fed contacts about 100 businesses by telephone to obtain information on current conditions. To get a clear industry picture, the Fed gathers a minimum of three responses for each industry covered, including retail sales, agriculture, finance and telecommunications manufacturing, among others. An economist writes a detailed sectoral description and then writes a regional economic summary.

Published eight times a year, the Beige Book report includes a national summary and the 12 district summaries. The responsibility for compiling the national summary rotates among the Reserve Banks.

Tracking the Regional Economy
But how accurately does the Beige Book reflect current economic conditions? To find out, Dallas Fed economist Mine Yücel and research associate Nathan Balke analyzed how well the Eleventh District Beige Book tracks the Texas economy. In their recent Economic and Financial Review article, "Evaluating the Eleventh District's Beige Book," Yücel and Balke use both inflation-adjusted gross state product (real GSP) and Texas employment growth as indicators of the regional economy.

They find that the Beige Book reflects Texas GSP and Texas employment growth very well. The Beige Book also does a good job of predicting GSP growth one quarter ahead. The Beige Book sectoral summaries of the mining and manufacturing industries also track total GSP and employment growth quite dependably, implying that these industries are good weather vanes for the overall Texas economy. Looking at the sectors, the authors find that the Beige Book's retail, mining, construction, manufacturing and finance sector summaries are good predictors of economic activity in their own sector (as measured by value-added). The manufacturing and mining sector summaries also predict employment growth in their sectors very well.

Hence, the authors show that the Dallas Fed Beige Book is an extremely reliable indicator of the regional economy, and its timeliness makes it a helpful tool for regional economic analysis.

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