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 February 2014

  1. Characterize the overall national economic activity reported by the 12 Federal Reserve districts in the February 2014 Beige Book.
    • Reports from most of the 12 Federal Reserve districts indicated that economic conditions continued to expand from January to early February. Eight districts reported improved levels of activity, but in most cases the increases were characterized as modest to moderate. Second District and Third District experienced a slight decline in activity, which was mostly attributed to the unusually severe weather in those regions. Most districts reported weakened growth in retail sales, but Fifth District, Eighth District, and Ninth District reported modest sales growth since the beginning of the year. The demand for nonfinancial services was mixed compared with the last report; however, Twelfth District and First District reported strong demand for technology-related services. Severe weather hurt manufacturing sales and production in several districts. Residential real estate markets continued to improve modestly in a number of areas. Commercial real estate leasing expanded, whereas reports on construction activity were mixed. Employment levels rose gradually in most districts.
  2. Describe the contrasting conditions in the manufacturing sector for the Third District and Fourth districts.
    • The Third District’s manufacturers reported deteriorating activity levels during the current Beige Book period because severe winter weather repeatedly disrupted sales and production. Modest growth in orders and shipments, as reported for the previous period, continued for several weeks but had given way to slight overall declines by the end of this Beige Book period. In the Fourth District, however, factories reported that demand remained at a moderate-to-robust level over the past six weeks. Supply-chain disruptions were viewed more as annoyances than as events that could affect business activity negatively. Compared to a year earlier, production levels in the Fourth District were generally consistent or somewhat higher.
  3. Name two districts whose agricultural production has been affected by drought conditions or water shortages. What specific impact will these conditions have on agriculture in those districts?
    • The Eleventh and Twelfth districts have been affected by drought conditions and water shortages. After gradually easing throughout the fall, Eleventh District drought conditions worsened slightly in January and early February. Wheat crop and pasture conditions also deteriorated somewhat due to insufficient rainfall. In the Twelfth, concerns about water costs and availability may cause farmers in California’s Central Valley to scale back planting.
  4. In the Seventh District, severe weather disrupted the flow of agricultural products between farms and markets during the reporting period. But there were other problems, which kept crops on farms longer than intended. Explain.
    • Transportation problems delayed shipments. Specifically, there were shortages of trucks and drivers to deliver inventories from the large harvest last fall.
  5. How did the weather, Cupid and President’s Day give tourism just the boost it needed in the Fifth District in mid-February.
    • Tourism at winter resorts was booming because natural snowfalls were abundant and colder temperatures permitted additional snowmaking at winter resorts. In several locations, mid-February bookings were solid over the weekend that was sandwiched between Valentine’s Day and President’s Day.
  6. Severe weather reportedly disrupted supply chains and delayed shipments on land. Give an example.
    • In the Eleventh, railroad cargo volumes fell slightly below year-earlier levels, largely because of winter weather conditions across the country.
  7. Describe overall economic activity in the Fourth District.
    • Overall business activity in the Fourth District continued at a moderate pace in early 2014. Although the severe weather contributed to some temporary slowing across industry sectors, it was viewed mainly as an inconvenience. Demand for manufactured products remained at a moderate-to-robust level. Post-holiday purchases were characterized as disappointing. In contrast, January auto sales showed strong month-over-month gains.
  8. What were the positive conditions in the Fourth District's energy sector?
    • The number of drilling rigs in Ohio’s Utica shale region has increased since the year began. Natural gas production was stable and continuing at a high level. Cold weather helped boost well-head prices for natural gas and oil.
  9. Retailers who were contacted in the Fourth District reported that revenues were below those seen in December and attributed most of the decline to poor weather. But two retailers saw the decline in different terms. Explain.
    • Two retailers commented that part of the decline illustrates a fundamental shift in how consumers spend money. A furniture dealer reported that his customers are less inclined to buy quality goods that can be handed down. Rather, they are buying only what they need and are looking for the best value.
  10. What does the Beige Book say about capacity utilization in the Fourth District’s manufacturing sector?
    • Several factory representatives commented that capacity utilization rates were above their normal range or were increasing in the last six weeks. Steel producers noted significant excess capacity.

The Twelve Federal Reserve Districts
United States with links to websites of the Federal Reserve Districts

The Federal Reserve officially identifies Districts by number and Reserve Bank city.

In the 12th District, the Seattle Branch serves Alaska, and the San Francisco Bank serves Hawaii. The System serves commonwealths and territories as follows: the New York Bank serves the Commonwealth of Puerto Rico and the U.S. Virgin Islands; the San Francisco Bank serves American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands. The Board of Governors revised the branch boundaries of the System in February 1996.

First District: Boston Second District: New York Third District: Philadelphia Fourth District: Cleveland Board of Governors Board of Governors Fifth District: Richmond Sixth District: Atlanta Seventh District: Chicago Eighth District: St. Louis Ninth District: Minneapolis Tenth District: Kansas City Eleventh District: Dallas Twelfth District: San Francisco Twelfth District: San Francisco