Beige Book in the Classroom
Beige Book discussion questions and suggested answers
What is the Beige Book?
The Beige Bookis 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 business sector. A 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 October, 2010
- Characterize the overall national economic activity reported by the 12 Federal Reserve Districts in the Beige Book dated October 20, 2010.
- On balance, U.S. economic activity continued to grow at a modest pace from September to early October. Manufacturing activity continued to expand, consumer spending was steady to slightly higher, and new car sales held steady or rose; used car sales were strong, and travel and tourism increased. The energy sector expanded further, and agricultural conditions were generally favorable. However, housing markets remained weak, with most districts reporting sales below year-earlier levels.
- Pick three districts from the most recent Beige Book and compare the manufacturing, retail sales/consumer spending, and banking/finance sectors. What does the comparison tell you about each sector?
- In the Third District (Philadelphia), manufacturers reported slight net decreases in shipments and new orders from August to September, but despite the district's generally slower manufacturing activity, some sectors reported stronger demand for their products. In the Seventh District (Chicago), manufacturing production increased in September, with several metals producers reporting their best sales so far this year. In the Twelfth District, manufacturing activity expanded further, with demand for semiconductors and other technology products continuing to grow. Retailers in the Third District reported modest year-over-year gains for the back-to-school shopping period and continued sales gains in recent weeks. In the Seventh District, contacts indicated that little had changed from the previous period; consumers were slowly regaining confidence but remained price conscious. In the Twelfth District, retail sales were still sluggish but somewhat improved on balance. And in the Third District's finance sector, bankers reported slack demand for both consumer and business loans. In the Seventh District, the corporate financing environment was favorable, although the lack of available credit for small businesses was a source of some concern. Twelfth District banking contacts reported that demand for commercial and industrial loans continued to be constrained by businesses' cautious approach to capital spending, and that consumer loan demand remained weak.
- Compare and contrast the agriculture sectors of two districts.
- In the Eighth District (St. Louis), dry weather provided excellent harvest conditions, although in many parts of the district, moderate-to-severe drought affected some crops. At the beginning of October, overall corn, soybean, sorghum, cotton and rice harvests were ahead of their normal paces by between 28 percent and 137 percent. But in the Ninth District (Minneapolis), widespread rains flooded farmland and delayed harvests. Crops were relatively plentiful and in good condition, but the cereal grains harvest was delayed by heavy rains.
- Which districts reported on the energy/natural resources sector, and what were the conditions in two of those districts?
- The Fourth, Sixth, Eighth, Ninth, Tenth, Eleventh, and Twelfth districts reported on the energy sector. In the Fourth District (Cleveland), oil and gas output had held steady during the previous six weeks and were expected to remain at current levels in the near term. Companies that are not drilling in Marcellus shale, a largely untapped natural gas reserve, expect to slow down during the next several months because of slumping gas prices. In the Sixth District (Atlanta), regional oil production continued to rise, and inventories of crude from the Gulf of Mexico remained near the top of their historical range for this time of year.
- What does the Beige Book summary say about tourism conditions?
- Most districts reported that travel and tourism continued to improve. In the Fifth District (Richmond), tourist activity grew stronger, while contacts in San Francisco noted that growth in business travel and convention activity was leading to higher visitor counts and hotel occupancy rates. Hotel occupancy rose in the Ninth District (Minneapolis) and Tenth District (Kansas City); occupancy remained high in the Second District (New York City), but October bookings there were weaker than expected. The Sixth District (Atlanta) noted that the Gulf oil spill was still limiting tourist activity in some areas, but those losses were offset by increased activity in Northeast Florida, Georgia, and Tennessee.
- In the Fourth District's banking sector, what were the conditions in consumer loans and credit standards?
- On the consumer side, conventional loan demand remains very weak, with most activity concentrated in indirect auto lending and home-equity lines of credit.
- What were Fourth District builders experiencing in new home sales?
- New home sales slowed during the past six weeks, and reports said construction would remain very sluggish going into 2011. Builders attribute the depressed market to tight credit, foreclosures, and a large inventory of existing homes.
- Compare the Fourth District's manufacturing-sector conditions, as described in the October 2010 Beige Book, with those reported in the same month a year earlier.
- Manufacturers reported modest growth in new orders and output in the six weeks before release of the October 2010 Beige Book. Production was also higher than it was in October 2009, with several contacts reporting double-digit increases. In October 2009, production was steady to up slightly; increases were attributed to new orders and seasonal adjustments. On a year-over-year basis, factory output in 2009 remained depressed.
- How did the Fourth District's retail sales change between October 2009 and October 2010? How did they remain the same?
- In 2009, the District's retailers reported that sales were flat or slightly stronger on a month-to-month basis, although they were still below year-earlier levels. In both 2009 and 2010, consumers focused on purchasing necessities rather than discretionary items and were price sensitive. For 2010, retailers expect sales growth through the holiday season to be conservative at best.
- In the October 2010 Beige Book, what U.S. sectors are reported to have improved?
- Manufacturing activity continued to expand, consumer spending improved slightly, agricultural conditions were generally favorable with above-average yields expected, the energy sector continued to expand, sales of new and used vehicles rose, and activity in the travel and tourism sector increased.