Does the Beige Book Reflect U.S. Employment and Inflation Trends?

Abstract

the Federal Reserve releases the Beige Book, a summary of commentary on economic conditions. The report is based on anecdotal and qualitative information collected from a wide range of contacts, including business and community leaders across the nation. Although the “beige” in the title may imply a bland report, its anecdotes provide a colorful narrative about economic developments throughout the nation. The report is intended to provide a timely assessment of economic conditions prior to the release of official statistics such as the unemployment rate or inflation. Readers dissect dozens of pages to identify tidbits of information or key themes that shed light on the economy’s current and future prospects. For those lacking the time to comb through its pages, we show that simple, automated text analysis can extract useful metrics from the text of the Beige Book.1