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. Read more 

Study Questions: Beige Book, published November, 2011

  1. Characterize the overall national economic activity reported by the 12 Federal Reserve districts in the November 30,2011, Beige Book report.
    • Overall economic activity increased at a slow to moderate pace since the October report across all Federal Reserve districts except St. Louis, where there was a decline in economic activity. Motor vehicle sales increased in several districts, and tourism showed signs of strength. Manufacturing activity expanded at a steady pace across most of the country. Overall bank lending increased slightly since the previous report, and home refinancing grew at a more rapid pace. Residential real estate activity generally remained sluggish, and commercial real estate activity remained lackluster across most of the nation. Districts mostly reported favorable agricultural conditions, and activity in the energy and mining sectors increased.
  2. The Third District (Philadelphia) has recently endured several unusual weather patterns that impacted its economy. What weather event spurred economic activity during this Beige Book period?
    • An unusual weekend snowstorm caused widespread electric utility outages and disrupted business. But the cold weather ultimately triggered shoppers’ interest for the winter season. Retailers reported renewed growth in year-over-year sales.
  3. Describe why some firms in several districts were unable to fill their job openings.
    • The First (Boston), Third (Philadelphia), Fourth (Cleveland), Fifth (Richmond), Sixth (Atlanta), and Ninth (Minneapolis) districts noted that some firms were having difficulty finding qualified workers, particularly for high-skilled manufacturing and technical positions.
  4. The energy and mining sectors had good news to report since the previous report. Describe the conditions in the Ninth (Minneapolis) and Eleventh (Dallas) districts.
    • In the Ninth District (Minneapolis), the energy and mining sector saw continued strong growth. Oil exploration activity increased in Montana since the October report, and North Dakota regulators approved plans for a 105-megawatt wind farm, with three other wind energy programs being reviewed. Ninth District mines are operating at very high capacity utilization rates. The capacity utilization rate is the ratio between what is actually produced by a business and potential output of that business.
      In the Eleventh District (Dallas), drilling activity remained strong, with 20 new land rigs added in Texas since last report. Activity in the Gulf of Mexico also rose by six rigs. Shale directed activity continues at high levels.
  5. What districts reported increases in tourism?
    • Fifth District (Richmond) contacts reported slightly higher hotel bookings recently. A Myrtle Beach contact said higher hotel occupancy rates increased revenues, but the gains did not exceed pre-recession highs. In Virginia, a hotelier said “the phones have been flooded.” In western Virginia, people were making reservations for local winter recreational events, and the weeks surrounding Christmas were booked. In the Sixth District (Atlanta), hotel occupancy and room rates were up and convention bookings remained steady. Cruise line contacts reported full occupancy and increased onboard spending. In Florida, international tourists continued to bolster activity with increases in Latin American visitors offsetting declines in European vacationers. The First (Boston), Second (New York), and Twelfth (San Francisco) districts also reported improving tourist trade.
  6. What role has regulatory uncertainty played in shaping the adverse conditions in the Second District's  (New York) financial sector?
    • In the Second District (New York) regulatory uncertainty is hampering planning and causing shifts in resources among areas. While securities firms are reducing headcounts overall, they still are hiring in the legal and compliance areas.
  7. What was the overall economic summary for the Fourth District (Cleveland)?
    • Business activity expanded at a modest pace in the Fourth District since the last report. Manufacturers reported that new orders and production were stable. Single-family home building remained sluggish. Demand for business loans showed a moderate improvement. Auto dealers said sales of new and used vehicles were very good. Shale gas drilling and production continued to expand. Freight transport volume was stable. Hiring remained at a low level across almost all industry sectors. Wage pressures were contained.
  8. Compare Fourth District (Cleveland) retail sales in the November 2011 Beige Book report to the November 2010 report.
    • Retailers saw a slight improvement in sales during October 2011, as compared to September, with several contacts noting an increase in purchases of cold-weather-related items and home furnishings. Transactions were also ahead of last year’s levels, mainly in the mid-single digits. Retailers expect stronger sales on a year-over-year basis for the holiday shopping season.
      In 2010, retail sales for the period from mid-September through mid-October 2010 were flat or down slightly when compared to the previous 30-day period. The exception was food retailing, where sales showed a modest improvement. A few contacts noted that consumers had postponed buying cold-weather items.
  9. Describe the mixed conditions that existed in the construction sector in the Fourth district (Cleveland).
    • Single-family home construction in the Fourth District remained sluggish, while activity in multi-family housing and remodeling expanded. But activity in nonresidential construction for small to medium-size builders was described as steady or slowly improving.
  10. What does the November 2011 Beige Book report say about capacity utilization in the manufacturing sector in the Fourth District (Cleveland)?
    • Capacity utilization remained below normal at most factories, while steel producers saw their utilization rates at or near normal levels.