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 April cycle. Read more 

Study Questions: Beige Book, published April 2012

  1. Characterize the overall national economy as reported by the 12 Federal Reserve districts in the April 2012, Beige Book.
    • Reports from the 12 Federal Reserve districts indicated that the economy continued to expand at a modest to moderate pace from mid-February through late March. The First (Boston), Sixth (Atlanta) Seventh (Chicago), Eleventh (Dallas) and Twelfth (San Francisco) districts grew moderately. The Fourth (Cleveland) and Eighth (St. Louis) districts grew modestly.
      Manufacturing continued to expand in most districts with gains in automotive and high-technology industries. Demand for professional business services showed modest to strong growth and freight volume was mainly higher. Reports on retail spending were positive; however, many contacts are concerned about rising gasoline prices and its potential affect on discretionary spending. New vehicle sales were reported as strong or strengthening across much of the United States. Tourism increased in most districts. Residential real estate showed some improvement, while  non-residential real estate either increased or held steady in most districts. Agricultural conditions were favorable, mining activity expanded, and oil extraction rose. Banking conditions were largely stable with some improvements in loan demand. Hiring was steady or showed modest increases across many districts, with difficulty finding qualified and high-skilled workers.
  2. The manufacturing sector expanded across many districts. Identify the industries that contributed to the rise in production. What obstacle did some manufacturers encounter as they tried to expand payrolls?
    • Contacts in the automotive industries reported gains in the Fourth (Cleveland), Sixth (Atlanta) and Seventh (Chicago) districts. High-technology manufacturers in the Tenth (Kansas City), Eleventh (Dallas) and Twelfth (San Francisco) districts reported increased sales. The Third (Philadelphia) and Eleventh (Dallas) districts indicated improvement in demand for manufacturing tied to residential housing and construction. As manufacturers in the First (Boston), Fourth (Cleveland) and Seventh (Chicago) districts expanded payrolls, they found it difficult to find highly-skilled workers.
  3. Unusually warm and mild weather across the districts had both a positive and negative impact on retail spending and tourism. Explain.
    • Unseasonably warm weather boosted retail sales in the First (Boston) Third (Philadelphia), Fourth (Cleveland) Fifth (Richmond) and Seventh (Chicago) districts. Mild winter weather boosted automobile sales in the Fourth District (Cleveland), but depressed motor vehicle service spending in the Second (New York) and Ninth (Minnesota) districts. Warm weather boosted tourism in the Fifth District (Richmond), but the Ninth District (Minneapolis) reported a slowdown in activity due to a general lack of snow this winter.
  4. What does the Beige Book summary say about demand for nonfinancial services?
    • Demand for professional business services was characterized as modest to strong in the First (Boston), Third (Philadelphia), Fifth (Richmond), Tenth (Kansas City) and Eleventh (Dallas) districts. The Eighth (St. Louis), Ninth (Minneapolis) and Twelfth (San Francisco) districts reported mixed demand. The First (Boston) and Fifth (Richmond) districts reported increasing demand for marketing, advertising and consulting services, while accountant services saw a modest rise in the Ninth (Minneapolis) and Eleventh (Dallas) districts. The Eighth District (St. Louis) reported that plans have been announced to close certain freight transport and distribution facilities. Contacts in the Fourth (Cleveland), Fifth (Richmond) and Tenth (Kansas City) districts noted a shortage of qualified truck drivers.
  5. Name one district that reported on imports and exports in this Beige Book and discuss the conditions that are cited.
    • The Fifth District (Richmond) reported on imports and exports in this Beige Book. Port activity in the district continued to strengthen since the end of last year, with exports slightly out performing imports. Several officials noted that autos and automotive parts were key products boosting both imports and exports. Exports of bulk goods, including coal, wood by-products, and agricultural goods continued to be robust.
  6. Which district saw an “unexpectedly large” increase in real estate sales in February?
    • The Ninth District (Minneapolis) saw an unexpectedly large increase in sales activity in February. Home sales were up 23 percent from the same period a year ago in the Minneapolis-St. Paul area and the inventory of homes for sale was down 27 percent. In the Sioux Falls area, February home sales were up 5 percent and inventory was down 7 percent relative to a year ago. One broker said that lower-priced homes saw an investor “feeding frenzy” with properties selling in a few days with multiple offers.
      (The following optional questions can be used to spark further discussion: Do you think this investor feeding frenzy is a good thing? Why or why not? What might the potential outcome(s) be on a neighborhood)?
  7. Discuss one instance in the April report in which contacts cited that international conditions had a direct impact on agricultural activity.
    • The Sixth (Atlanta) and Seventh (Chicago) districts reported an increase in the prices paid to farmers for soybeans. The Seventh District (Chicago) noted that the increase was due to lower-than-expected harvests in South America.
  8. What was the overall economic summary for the Fourth District (Cleveland)?
    • The economy in the Fourth District (Cleveland) grew at a modest pace since the February report. There was a small increase in manufacturing production and activity in residential and non-residential construction picked up slightly. Many retailers and auto dealers characterized February sales as good. Shale gas activity expanded, while other energy production remained stable. Demand for consumer and business credit improved slightly. Hiring remains at a low level, mainly limited to the freight transport and manufacturing sectors.
  9. Contacts in the Fourth District (Cleveland) cited unusually warm weather as a primary factor for sales that had increased by single digits relative to year-ago levels. Despite this increase, explain how the economy has affected middle-income consumers. (What affect might the unusually warm weather have on future sales?)
    • Several contacts described middle-income households as challenged. They said that these consumers are trading down, looking for value, and remain very sensitive to rising gasoline prices. Unusually warm weather may increase sales of outdoor and home improvement items as the vacation season approaches.
  10. What does the April 2012 Beige Book report say about capacity utilization in the manufacturing sector in the Fourth District (Cleveland)?
    • Capacity utilization has returned to normal rates for the majority of our contacts, while inventories were consistent with demand.