Beige Book Offers Valuable Economic Insight
Referred to simply as the ‘Beige Book’, the Summary of Commentary on Current Economic Conditions is published eight times a year by the US Federal Reserve Board prior to Federal Open Market Committee meetings. Compiled on a rotational basis by each of the twelve Federal Reserve Banks, the Beige Book presents information on the current economic climate in each Federal Reserve district, analyzed by economic sector and is considered by many stock market investors to be a valuable tool in making investment decisions.
The information contained in the Beige Book is largely anecdotal, based on reports from Branch and Bank directors, as well as making use of interviews with prominent business contacts, experienced economists, recognized market experts, and other relevant sources. The anticipated 2011 release dates of the Beige Book are January 12, March 2, April 13, June 8, July 27, September 7, October 19 and November 30.
There are a number of highlights from the January 12 Beige Book which are seen as encouraging, including the report that economic activity continued to improve, albeit moderately, over all districts through November and December of last year. Retail, manufacturing and nonfinancial service sectors showed more of an improvement than real estate and financial services, with retailers reporting higher sales in the 2010 holiday season than the previous year, with some reporting consumer activity that went beyond expectations. However, housing remains a concern. Employment opportunities appear to be improving slightly, but wages remain fairly static, raising doubts as to improved consumer spending into 2011.
The Beige Book is released before the Federal Open Market Committee (FOMC) meets and is a feature of these meetings. The FOMC is a component of the Federal Reserve System, focusing on open market operations of the United States, being the buying and selling of United States Treasury securities, as well as setting monetary policy. Although by law the FOMC is required to meet a minimum of four times a year in Washington, the committee has been meeting every five to eight weeks – eight times a year – since 1981. Should decisions need to be made at any time between the scheduled meetings, telephone conferencing takes place with voting on plans of action taken by proxy. Of the information considered at meetings of the FOMC, only the Beige Book is made public.