The Beige Book
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The Beige Book

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The Beige Book The Beige Book Presentation Transcript

  • Introduction
    • Report on current economic conditions in each of the 12 Federal Reserve districts covering the entire U.S.
    • Regional Banks in the Federal Reserve System gather anecdotal information
    • The Beige Book summarizes this data into a relatively short document, giving a picture of economic trends and challenges faced by different parts of the nation
  • Federal Open Market Committee
    • The FOMC meets eight times per year to decide on monetary policy
    • Set the monetary stance by fixing the overnight borrowing rate (Short Term lending rates)
    • The FOMC attempts to affect price levels in order to keep inflation within the target range
  • Structure of the Beige Book
    Regional representation
    National (Summary)
    12 Districts:
    • Boston
    • New York
    • Philadelphia
    • Cleveland
    • Richmond
    • Atlanta
    • Chicago
    • St. Louis
    • Minneapolis
    • Kansas City
    • Dallas
    • San Francisco
    Sector representation
    • Retail
    • Tourism
    • Non Financial Services
    • Manufacturing
    • Real Estate and Construction
    • Banking
    • Financial Services
    • Agriculture
    • Natural Resources
  • Compiling the Beige Book
  • Interpretation
  • Interpreting the Beige Book…
    Consumer spending and Tourism
    • Consumer spending is the largest part of aggregate demand or effective demand at the macroeconomic level
    • Durable: Auto sales; Non durable goods: Retail sales
    • Tourism activity: business and leisure
    • Reasons for the change in consumer spending
    Nonfinancial Services
    • Port activity
    • Health care services
    • Transportation services: rail road shipments (industrial activity)
    • Domestic volumes of freight and parcels
  • Interpreting the Beige Book…
    Manufacturing
    • Manufacturing activity
    • Auto production
    • Consumer goods
    • Steel production
    • Textiles
    • Reasons for the change in manufacturing activity
    Real Estate and Construction
    • Residential real estate • Non residential real estate
    • Home construction - Demand for office space
    • Home prices - Commercial rental prices
    • Home re-modelling activity - Industrial construction
    • Rental prices
  • Interpreting the Beige Book…
    Banking and Financial Services
    • Loan demand
    • Commercial and industrial loans
    • Delinquencies rates: unable to pay loans
    • Credit worthiness
    Agriculture and Natural Resources
    • Crop and livestock: production sales and prices
    • Draught conditions
    • Energy sector
    • Production of oil, natural gas, coal etc: oil drilling activity, natural gas exploration, coal production
  • Interpreting the Beige Book…
    Employment, Wages and Prices
    • Labour market conditions
    • Wage rates
    • Unemployment figures
    • Input prices pressures
    - Ability to pass on the price rise
  • Interpreting the Beige Book
  • District Analysis
    Consumer Spending and Tourism:
    • Auto sales
    • Consumer confidence
    • Tourism Activity
    Other Business Activity
    • Labor Market
    • Hiring
    • Input costs
    • Manufacturing activity
    Financial Developments
    • Demand in consumer, commercial and industrial loans
    • Residential mortgages
    Construction and Real Estate
    • Residential rates
    • Commercial RE
    • Industrial vacancy rates
  • Quantifying the Beige Book
    • Beige Book provides anecdotal information
    • Balke and Petersen (2002) – Beige Book Index (Quantitative )
    • Converted the description of economic growth on a scale from-2 to 2
    • Beige Book Index: compilation of the scores
    • Easier to comprehend
    • Facilitates comparative analysis
  • ….Beige Book Index
    Source: Federal Reserve Bank of Atlanta – Economic review
  • Beige Book Index: 2006 v/s 2008 (recession)
    Consumer Spending and Tourism
    Real Estate and Construction
    Manufacturing
  • Significance
  • Significance of the Beige Book…
  • Impact of the Beige Book..
  • Shortcomings of the Beige Book..
    • Difficult to identify and quantify
    • Rarely is any new statistical data presented, only anecdotal reports
    • Filled with measured "Fed-speak“
    • Specific industry conclusions are hard to draw from the report
    • Each Fed district can use its discretion on what to include in its report
    • Expectations about such reports are difficult to ascertain
  • Beige Book v/s Consumer Confidence Index
  • Click anywhere on the image to see this video
  • Thank You
    By:
    Adhiraj Singh
    ChandniGoel
    GayatriSahdev
    KartikeyBhargava
    Shine Chabbra