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. The summary of the 12 districts’ reports is prepared by a designated Federal Reserve Bank on a rotating basis. Read more 

Study Questions: Beige Book, published January 2014

  1. Characterize the overall national economic activity reported by the 12 Federal Reserve districts in the January 2014 Beige Book.
    • Reports from the 12 Federal Reserve districts suggest that economic activity continued to expand across most regions and sectors from late November through the end of the year. Nine districts indicated that the local economy was expanding at a moderate pace. Boston and Philadelphia cited modest growth, and Kansas City reported that its economy held steady in December. The economic outlook is positive in most districts, with some reports citing expectations of "more of the same" and others anticipating a pickup in growth. Retail activity in three-quarters of the districts had increased since the last Beige Book; the exceptions were St. Louis, Kansas City, and Richmond. Most districts noted increased construction and residential sales activity, as well as rising home prices. A few reported that home sales or residential construction in some areas had slowed or declined in recent months. In the eight districts that report on energy, activity continued to increase, with Cleveland and Atlanta citing robust growth in the energy sector. Reports on transportation services were generally positive, and districts mentioning consumer and business services reported that demand for nonfinancial services had increased moderately since the last Beige Book report.
  2. Automobile sales declined slightly in the New York, Philadelphia, and Kansas City districts; remained strong in the Richmond, Atlanta and San Francisco districts; and were mixed in Dallas. What is the 2014 outlook for vehicle sales?
    • The 2014 outlook for vehicle sales is strong in Philadelphia, Richmond, Cleveland, Kansas City, and San Francisco.
  3. Discuss what contacts said about tourism spending in the Minneapolis, San Francisco, and Kansas City districts.
    • Minneapolis reported that winter tourism activity was off to a solid start because of snowy weather. The Kansas City District indicated that tourism activity had increased slightly since the last Beige Book. However, the San Francisco District reported that travel and tourism were down in Hawaii and remained somewhat weak in Las Vegas.
  4. Contacts in the Chicago District said that late holiday spending may have been affected by a negative nationwide occurrence that shook consumer confidence. Explain.
    • Contacts noted a negative impact on late holiday sales, probably because some customers were hesitant to use debit and credit cards after a data security breach at a large national retailer.
  5. Discuss the three specific areas of manufacturing strength that several districts mentioned.
    • The Boston, Chicago, and San Francisco districts reported exceptional strength in commercial aviation, driven by record backlogs at major aircraft producers. The Richmond, Chicago, and San Francisco districts mentioned that the housing market recovery has led to increased demand for construction materials from raw materials such as lumber to finished products like kitchen cabinets. The Boston, Cleveland, Atlanta, and Chicago districts reported above-average strength in the auto industry.
  6. What district reports on the Port sector and explain some of the conditions that were reported in the Beige Book?
    • Contacts in the Richmond District reported a strong year-over-year increase in traffic, even after accounting for the diversions of cargo from northern ports that resulted from last year’s major hurricane. Paper, pulp, and agricultural exports were especially robust. Auto units were down slightly from a year ago, but remained strong. Exports of agricultural and construction machinery increased from earlier this fall, but declined slightly from a year earlier. In contrast to softer demand in domestic markets, foreign coal shipments rose slightly during the same period.
  7. Describe overall economic activity in the Cleveland District.
    • The District’s economy continued to expand at a moderate pace during the past six weeks. Single-family home construction starts were significantly above year-ago levels. Nonresidential builders saw business pick up. Retailers report stronger sales. Freight shipments were above expectations. Hiring was sluggish across most sectors.
  8. How did the Cleveland District’s manufacturing sector fare in the past six weeks?
    • District factories indicated that demand continued at a moderate-to-robust level over the past six weeks. Most of the contacts have a positive outlook for 2014 and expect demand for their products to remain at current levels. The firms that anticipate the strongest activity are suppliers to the aerospace, housing, motor-vehicle, and oil and gas industries. The recently enacted federal budget agreement is viewed as providing a boost to defense contractors in the upcoming year.
  9. One contact in the Cleveland District reported a slowdown in sales of teen clothing and school supplies through 2013. To what could this be attributed?
    • This contact believes that slowing in the sales of teen clothing and school supplies throughout 2013 is due to a high level of teen unemployment.
  10. What does the Beige Book say about capacity utilization in the Cleveland District’s manufacturing sector?
    • Most manufacturers reported capacity utilization rates that were within a normal range. Many respondents said that they have excess production capacity and could easily absorb any increase in demand. Auto parts suppliers were described as operating near capacity. A few steel producers reported lower capacity utilization, partly because of excess global capacity.