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 October 2013

  1. Characterize the overall national economic activity reported by the 12 Federal Reserve districts in the September/October 2013 Beige Book.
    • National economic activity continued to expand at a modest to moderate pace during the reporting period of September through early October. Growth slowed in the Philadelphia, Richmond, Chicago, and Kansas City districts, while the other eight districts reported growth rates similar to those of the previous reporting period. Consumer spending continued to increase, and travel and tourism expanded in most districts. Business spending and payrolls grew in many districts. Manufacturing activity expanded modestly, and demand for nonfinancial services rose. Residential construction continued to increase at a moderate pace, but nonresidential construction grew more slowly. Real estate activity varied across districts but continued to improve.
  2. Manufacturing activity expanded modestly in September, with some notable exceptions. Describe them.
    • Overall manufacturing activity in Cleveland, St. Louis, and Minneapolis experienced stronger growth, while New York, Richmond, and Chicago saw growth weaken. The automotive and aerospace industries continued to be a source of strength in several districts. Increasing demand for steel was reported by the Cleveland, Chicago, St. Louis, and San Francisco districts, while Dallas saw stronger demand for fabricated metal products.
  3. The partial shutdown of the federal government, the Affordable Care Act, and sequestration affected certain sectors of the economy. Explain.
    • In Richmond, the federal government shutdown led to the closing of some tourist attractions. Several districts reported that contacts were reluctant to expand payrolls, citing uncertainty surrounding the implementation of the Affordable Care Act and fiscal policy in general. In the nonfinancial services sector, Boston reported robust growth in consulting but noted that activity at a government firm remained weak as the result of sequestration.
  4. Hurricane Sandy struck in 2012, but the New York District is still feeling its effects. Explain.
    • Home sales were strong in the New York District; the exception was the Jersey Shore, which is still recovering from Hurricane Sandy.
  5. Give examples of how natural resource extraction increased across districts.
    • Oil and natural gas activity remained high in the Cleveland and Dallas districts, was solid in Kansas City, and expanded in the Richmond and Minneapolis districts. Atlanta and Dallas noted steady demand for energy, and San Francisco indicated that the demand for oil products edged up, resulting in increased refinery activity. Refinery expansions continued in the Atlanta District, and mining activity picked up in the Minneapolis District.
  6. Explain the extreme agricultural conditions that existed across the districts.
    • Heavy rains hurt agriculture in the Richmond, Atlanta, and Kansas City districts, resulting in their designation as natural disaster areas. The Chicago, Minneapolis, and Dallas districts, by contrast, suffered drought conditions.
  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. Sales of new and existing homes were above year-ago levels. Nonresidential builders saw business pick up. Retailers reported stronger sales. The rate of growth in freight volume slowed. Hiring was sluggish.
  8. How did the Cleveland District’s manufacturing sector fare in the past six weeks?
    • District factories reported demand was either steady or growing at a robust pace. The companies that saw the strongest activity were suppliers to the housing, motor vehicle, and oil and gas industries.
  9. Why was the Cleveland District’s consumer spending stronger than it had been during the previous four months and above the levels reported a year earlier?
    • An improving labor market and new product introductions were cited as reasons for the increases. Products in greater demand included back-to-school items, home furnishings, and cold-weather apparel. A food retailer attributed her chain’s margin growth to consumers trading up in their buying habits.
  10. Describe lending conditions for the San Francisco District during the past six weeks.
    • Financial institutions indicated that loan demand rose. Most contacts reported increased lending. Some small businesses in areas with strengthening local economic conditions sought increased financing for equipment or real estate purchases. Some banks reported slower mortgage origination and especially refinancing activity in response to higher interest rates, although rising home price appraisals have boosted activity in home equity lending.