Beige Book in the Classroom

Beige Book discussion questions and suggested answers

What is the Beige Book?

The Beige Book is a report on the nation’s current economic conditions that is published eight times a year by the Federal Reserve. Each of the 12 Federal Reserve Bank districts gathers anecdotal information on its region’s economy through reports from Bank and branch directors and interviews with key business contacts, economists, market experts, and other sources. The Beige Book summarizes this information by district and industrial sector. A summary of the 12 districts’ reports is prepared by a designated Federal Reserve Bank on a rotating basis. Cleveland prepared the national summary for the November cycle. Read more 

Study Questions: Beige Book, published January 2013

  1. Characterize the overall national economic activity reported by the 12 Federal Reserve districts in the January 2013, Beige Book.
    • The Twelve Federal Reserve Districts reported that overall economic activity expanded, with the pace of growth either being modest or moderate. All twelve districts reported some growth in consumer spending, with holiday sales being modestly higher. Real estate activity also expanded or held steady in eleven districts for existing home sales or leasing. Trends in wages, prices and employment conditions were relatively unchanged in the Federal Reserve Districts. Reports of manufacturing were mixed overall with six Districts growing since the last Beige Book and three contracting. Transportation services were generally positive among the six Districts that reported.
  2. Hurricane Sandy disrupted business activity in the Philadelphia District during the previous Beige Book period, but the overall outlook for modest growth is considerably more optimistic. Explain.
    • General retail sales, general services and commercial real estate leasing recovered from temporarily mild growth rates to resume their previously modest growth rates. Sales of new and used vehicles accelerated to a moderate rate of growth, and residential real estate sales maintained a strong year-over-year growth rate (from a relatively low base). Mild rates of growth are once again evident in manufacturing, staffing services, transportation services and construction after many sectors suffered storm-related disruptions.
  3. How did Hurricane Sandy have a negative and a positive effect on construction activity in New York?
    • Initially, Hurricane Sandy disrupted construction activity in New York. But it has since led to increased work for subcontractors on repairs and reconstruction.
  4. What was the outlook for loan demand across the 12 districts during this Beige Book period?
    • Overall, loan demand was largely unchanged in the Philadelphia, Cleveland, Richmond, Kansas City and San Francisco districts, with most of these Districts reporting a continuation of slight to moderate growth in total volume. The New York, Atlanta, Chicago, and Dallas districts reported stronger demand than reported previously, while the St. Louis District reported a slight decline. Some increased lending in the Philadelphia, Chicago and Dallas districts was driven by businesses taking out loans for special year-end purposes such as tax planning and dividend payments.
  5. Give examples of two Districts where contacts reported strong travel and tourism activity.
    • In the Boston District, the tourism industry ended 2012: Q4 on a high note, establishing new records for hotel room occupancy rates and revenues. Strong domestic and international corporate business travel and international leisure travel account for much of this performance. The Atlanta District reported strong travel and tourism activity. Hospitality contacts noted increases in visitation and spending in the final quarter of 2012. Lower gasoline prices boosted leisure travel. Business travel and attendance at major conventions also increased. International visitors continued to lift tourism activity and advance reservations of international travel have exceeded expectations.
  6. There were record highs and declines in the energy sector when it came to the production of various types of energy. Discuss the types of energy that yielded high production levels and those that declined.
    • Production of oil and natural gas held steady at high and sometimes record levels in the Cleveland, Richmond, Minneapolis and Dallas districts. In the San Francisco District, activity expanded to historic levels. Contacts in the Cleveland District reported that shale gas activity grew at a robust pace. But coal production declined in the Cleveland, Richmond, Chicago, St. Louis, and Kansas City districts since the previous Beige Book.
  7. What impact did the Mississippi River have on the transportation of crops in the Chicago and Kansas City districts?
    • Low levels of the Mississippi River hampered barge traffic moving both crops to market and inputs to farms. The drought conditions in the Kansas City District caused water levels on the Mississippi River to fall further, hindering commodity transportation to and from agricultural regions.
  8. Describe overall economic activity in the Cleveland District.
    • Business activity expanded at a modest pace during the past six weeks. Many contacts reported that their outlook for the New Year is uncertain due to unresolved fiscal policy matters. The slowdown in freight transport volume seen in September and October has abated. Hiring was sluggish across industries. Staffing-firm representatives saw little change in the number of job openings and placements, with vacancies primarily in manufacturing and healthcare.
  9. What does the Beige Book say about capacity utilization in the Cleveland District manufacturing sector?
    • Manufacturers noted that capacity utilization has fallen in recent weeks; however rates were within or slightly below their normal range.
  10. What were the manufacturing conditions for the Cleveland District in the November 2012 Beige Book versus the January 2013 report?
    • Factories reported that new orders and production increased on net during the six weeks prior to the November 2012 Beige Book. Companies citing increases were mainly linked to aerospace, construction machinery, medical device, motor vehicle and oil and gas industries. But according to the January 2013 Beige Book report, District factories indicated that new orders and production were flat or down slightly during the past six weeks. Companies seeing increases were largely suppliers to the motor vehicle and energy industries.