Tag Archives | Fed

The Fed Beige Book

See Also:
Economic Indicators
Balance of Payments
Supply and Demand Elasticity
Stagflation
What are the Twin Deficits?

Federal Reserve Beige Book

The Fed beige book is more formally known as the “Summary of Commentary on Current Economic Conditions.” The beige book describes economic conditions in each of the twelve Federal Reserve Bank districts. The beige book is published eight times per year by the Federal Reserve Board. In addition, the reports are available to the public. The book is nicknamed the beige book because the cover is beige.

Federal Reserve District Banks

The Federal Reserve Board oversees the Federal Reserve System, which is the central bank of the United States. The twelve district banks are headquartered in Atlanta, Boston, Chicago, Cleveland, Dallas, Kansas City, Minneapolis, New York, Philadelphia, Richmond, San Francisco, and St. Louis.

What’s in the Beige Books?

The beige books summarize the economic conditions of the twelve Federal Reserve Bank districts. Furthermore, anecdotal evidence determines the economic conditions. As a result, Federal Reserve Bank officials meet with and interview economists, industry experts, and key business contacts and ask them for their perceptions of current economic conditions. They use the information garnered from these sources to compose the summary.

Each District Bank writes up its report, summarizing economic conditions by sector, and submits the summary to the district bank responsible for compiling the beige book. Responsibility for compiling the beige book rotates among all the district banks. The district bank responsible for compiling the beige book then summarizes the district economic conditions in a broader overall summary of economic conditions.

The summaries describe economic conditions in descriptive terms rather than with lots of numeric data and quantitative analysis.

What is the Beige Book For?

When the Federal Reserve Open Market Committee (FOMC) meets eight times per year to discuss and decide issues of U.S. monetary policy, such as raising or lowering the fed funds rate, they consider the information in the beige book as one of the sources of data in the process.

Beige Book 2008

To see the Federal Reserve beige book 2008 as well as older beige books, go to: federalreserve.gov.

fed beige book

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What Will the Fed Do?

The Federal Open Market Committee is expected to announce a third consecutive cut in the federal funds rate today. Equities were up early, but have fallen to near their open in advance of the announcement which will come later today. What will the Fed do?

What Will the Fed Do?

It would seem that the Fed is anticipating a slowdown in economic growth. The global economy is working through the problems in the credit markets. Furthermore, the meltdown in securities backed by subprime and adjustable-rate mortgages (ARMs) creates these problems. In addition, the anticipated impact of expected significant declines in home prices (US and UK) created these problems.

What Will the Fed Do

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Fed Lowers Rate Target – Time to Pop the Cork?

Yesterday afternoon, the Federal Open Market Committee did what nobody expected. The Fed lowers rate target. If you paid any attention to published reports, then they acknowledged what was already priced in by the futures markets and lowered its target for the federal funds rate by 50 basis points to 4.75%. While US equity markets reacted favorably to the news, with the Dow Jones Industrial Average, Nasdaq Composite, and S&P 500 indices all up on the news today, it is unclear as to whether this is a sign of good things to come, as the equity market reaction seems to suggest, or merely an attempt to forestall an inevitable slowdown of the US economy. The Fed, for its part, couched its change as a response to the current troubles. They have hit the credit markets, in particular mortgage lending:

“Economic growth was moderate during the first half of the year, but the tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally. Today’s action [intends] to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time.”

FOMC Statement September 18, 2007

Fed Lowers Rate Target Conclusion

It certainly seems that the Fed is responding to pressure from the financial community. The financial community wants them to ease its monetary policy in the face of increasing difficulties in the credit markets. In addition, they want them to help those who recently financed their home purchase with an adjustable rate mortgage. Needless to say, this is probably not good news for the US dollar. As a result, the dollar continues to depreciate in value relative to other major currencies. After reading the FOMC statement, we realized there may be a rougher patch ahead.

Fed Lowers Rate Target

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