Banking 101: What is the Fed Beige Book and Why Does it Matter For the Economy?

The Fed Beige Book contains updates on the performance of the economy in the 12 Federal Reserve districts that cover the country, along with a national overview. The data, which comes from surveys and interviews, provides the Fed with insight into regional trends and economic activity.

The Federal Reserve releases a Summary of Commentary on Current Economic Conditions eight times a year. The report, referred to as the Beige Book due to its beige-colored cover, is an important resource that impacts Fed monetary policies and your cost of borrowing.

What’s in the Beige Book?

The Beige Book provides a national summary, which is broken into sections on the country’s overall economic activity, employment and wages, and changes in prices. It then has summary highlights from the Federal Reserve districts’ reports, followed by detailed reports from each district.

Each Beige Book is about 32 pages long and starts with a map of the 12 Federal Reserve districts and an explanation of what the Beige Book is, where the information comes from and how it’s used. It's called the "Beige Book" because the color of the report's cover is beige.

The Fed has released Beige Books for decades, although the format and content have changed slightly over the years. In 2017, the Beige Book was redesigned in an effort to standardize much of the format and content.

There are 12 Federal Reserve districts, which cover all 50 states, as well as Washington, D.C. and U.S. commonwealths and territories. Each district collects information about its area by interviewing and surveying a variety of sources, including Federal Reserve Bank and branch directors, local businesses, community organizations, economists and market experts.

Beige Book data on each Federal Reserve district

Each district’s two-page report in the Beige Book offers a summary of the economic activity within the district and sector-specific breakdowns. Different districts don’t always use the same subheads, but common sector descriptions include:

• Employment and wages
• Consumer spending
• Business spending
• Construction and real estate
• Manufacturing
• Banking and finance
• Agriculture

You can see the anecdotal and thematic nature of the Beige Book’s information within these district reports.

For example, in the October 2019 Beige Book, the eighth district (the Federal Reserve Bank of St. Louis) highlighted how the area was still impacted by high waters in the Arkansas and Mississippi rivers, but barge activity was continuing to recover. The district also heard from contacts within the retail, auto and hospitality industries that consumer spending had increased slightly since the previous report.

The sector reports could even include anonymized quotes, sharing how a business owner or banker noticed a change in their industry, sales or consumer preferences. The national and district summaries may also compare the current report’s findings with the previous report’s findings and what happened in the same period last year.

How does the Beige Book influence Fed policy?

The Federal Reserve System, often simply known as the Fed, is the United States’ central bank, and it’s mandated to promote maximum employment and stable prices for people in the United States. It can do this in part by setting monetary policy and changing the federal funds rate, which can impact the rate at which financial institutions lend money to one another.

The Beige Book is one of the resources available to the Federal Open Market Committee (FOMC), a group within the Federal Reserve System that’s responsible for open market operations — one of the Fed’s monetary policy tools.

FOMC members receive the latest Beige Book about two weeks before each of their eight annually scheduled meetings, providing them with recent insights into economic changes and trends around the country.

While the Beige Book’s anecdotal and interview-based collection methods have limitations, the material is intended as a supplement to help guide the FOMC’s decisions. The Fed and FOMC also have access to more robust information, but it might not be as recent as the information in the Beige Book.

How the Fed's Beige Book can impact your wallet 

The fed rate can be important to you because it can indirectly impact your cost of borrowing and your earnings from saving.

For example, the Fed may increase the fed rate when it’s worried that inflation — the rising cost of general products and services — is too high. A rising rate can make borrowing money more expensive, and saving more attractive, which can help slow down inflation. However, you may find your variable rate loans, such as credit cards, lines of credit and home equity loans, increase their rates. As a result, you may wind up paying more interest.

On the other hand, if you don’t have variable rate debt, you could benefit from a higher fed rate because it can also lead to increases in the interest rate on your savings account or for a new certificate of deposit.

When the Fed lowers the fed rate, it wants to encourage businesses to borrow money — which could be spent on research, manufacturing or hiring — and people to spend money. This is one way the Fed can help spur the economy when things are sluggish.

A lower rate could be helpful if you have variable rate loans or if you’re looking to take out a new loan. For example, a lower rate might make a mortgage more accessible and cheaper. However, if you’re focused on saving and investing your money, a lower rate could lead to less earnings.

Where can you read the most recent Beige Book?

You can view and download the latest Beige Books on the Federal Reserve’s website. The Beige Book can offer insights into trends across the country, influence Fed policy and ultimately impact your personal finances. It’s also publically available for everyone to read.

You might find the material interesting and could glean some insights into economic and industry changes. If you run a business, especially if it’s part of one of the industries that your district covers in the report, the findings may help guide your business decisions.

However, because of its potential importance and public nature, many news outlets will also cover the Beige Book reports and help put the latest edition in context. Keeping up to date on these news stories and reports on Fed decisions may be easier and more helpful than reading the Beige Book in its entirety every few months.