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 March 2013

  1. Characterize the overall national economic activity reported by the 12 Federal Reserve districts in the March 2013, Beige Book.
    • Overall economic activity in the 12 Federal Reserve districts expanded at a moderate to modest pace. Five districts reported economic activity expanded at a modest pace in January and early February and five reported moderate growth. Boston and Chicago were the exceptions – with economic activity expanding slowly. There was an expansion in consumer spending in most districts, although retail sales slowed in several districts. Automobile sales were strong or solid in most districts and tourism remained solid or advanced further in most reporting districts, spurred by increased snowfall during the winter ski season. Nonfinancial services activity grew at a modest pace since the previous Beige Book. A few districts cited strong demand for technology, logistics, marketing and legal services. Some increases were reported in manufacturing activity in Boston, New York, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis and San Francisco, but the majority noted a slow pace of recovery.
  2. Compare the retail sector in the Boston and Atlanta districts.
    • Retailers in the Boston District reported that overall fiscal year 2012 sales increases ranged from one to three percent from 2011, with one source reporting a seven percent year-over-year rise. For January 2013, comparable-store sales ranged from a one percent decrease to six percent increase from January 2012. In Atlanta, district merchants noted a slight negative effect on consumer spending from the resumption of the full Social Security tax. Reports also indicated that expectations of higher healthcare costs and gasoline prices have contributed to a modest decline in consumer confidence. However, reports showed that sales were up on a year-over year basis at chain stores.
  3. Name the district in which contacts reported that 2012 was one of the best years that farmers have ever had.
    • Most contacts in the Richmond District noted that 2012 was one of the best years that farmers have ever had. They indicated that higher commodity prices had resulted in stronger cash positions. Several forestry contacts reported a pickup in lumber prices due to the uptick in the housing sector.
  4. Explain the conditions in the residential real estate markets across all districts and conversely how this could have an effect on loan demand.
    • Residential real estate markets strengthened in most districts, yet the pace of growth varied. Contacts in the Boston, St. Louis, Minneapolis, Kansas City, Dallas and San Francisco districts noted strong growth in home sales, while New York and Chicago reported slight improvements. Contacts in the Cleveland and Atlanta districts said sales were higher than a year ago. Home construction increased in most districts with the exception of the Kansas City District, where it was reported unchanged. Overall commercial real estate conditions were mixed or slightly improved in most districts. Commercial real estate activity grew modestly in the Philadelphia, Richmond, Atlanta and St. Louis districts and activity in the San Francisco District expanded. Boston and New York reported mixed activity, while the Kansas City and Dallas districts noted few changes.
  5. How is Hurricane Sandy still having a positive effect on the tourism sector in the New York district?
    • Travel was reported as robust in the New York District in hotels in the outer boroughs that are still occupied by displaced residents, utility workers, insurance adjusters and others due to Hurricane Sandy.
  6. What was the labor market outlook across the districts?
    • Labor market conditions generally improved, although several districts reported restrained hiring. Many districts reported an increase in temporary employees, while in Boston, there was an increase in the placement of permanent and temporary to permanent workers. Auto dealers in Cleveland and Kansas City have plans to hire more workers. Dallas noted robust hiring activity for experienced corporate, energy and intellectual property lawyers. Positions in manufacturing increased in New York, Richmond and Chicago. St. Louis noted weakness in healthcare services and information technology positions, while Cleveland reported reduced hiring plans from commercial builders and coal operators.
  7. Describe the conditions in the energy/natural resources sector in three districts.
    • Coal production declined across the Cleveland District relative to 2012 levels with the largest decreases seen in northern West Virginia and eastern Kentucky. The downward trend is expected to continue. However shale gas activity expanded at a robust pace and conventional oil and natural gas production was steady. In the Atlanta District, domestically produced oil has become increasingly available. Gulf Coast refiners reported declining dependence on imported crude for processing and more refined product being exported. In the Kansas City District, the number of active drilling rigs for both oil and natural gas were flat during the beginning of 2013, but began to edge higher in February. Energy contacts expected oil prices to remain at current levels during the next three months as a result of balanced supply and demand.
  8. Describe overall economic activity in the Cleveland District.
    • The economy grew at a modest pace since the last report. Manufacturing production and orders either were steady or rose slightly. The momentum seen in residential construction—single and multifamily—at the end of 2012 carried over into 2013. Automobile sales showed solid gains on a year-over-year basis. During January, retail sales fell below year-ago levels . Shale activity expanded at a robust pace, but little change was seen in conventional oil and natural gas production. Freight transport volume exceeded projections made late last year.
  9. What does the Beige Book say about capacity utilization in the Cleveland District manufacturing sector?
    • Steel producers reported that capacity utilization rose slightly during the past few weeks; other factory contacts said that rates were within or slightly below their normal range.
  10. What do districts attribute to decreased retail sales?
    • Many districts noted rising gasoline prices and fiscal policy may have had a negative effect on consumer sales, while contacts in Boston, New York and Minneapolis said severe weather depressed sales.