The Beige Book: Overrated, But Widely Awaited Anyway

The Beige Book, the Federal Reserve's regional summary of the latest economic gossip, gets a lot more attention than it deserves from the public and the press.

The latest edition of the report, with its beige cover, has been prepared for the July 2-3 meeting of the Federal Open Market Committee. It will be released on Wednesday and is likely to report more signs that the economy is firming.

But members of the committee, who use the report as one tool when setting rates, say the data should not be treated like a leading indicator, because they're not gathered scientifically.

"So it's dangerous to compare one Beige Book to another," says Joseph Coyne, spokesman for Fed Chairman Alan Greenspan.

Previous Issue Was on Target

The Beige Book released to the public May 1 heralded signs that the recession was bottoming. Subsequent data confirmed the observations, which had been made by the staffs of the 12 regional Federal Reserve Banks.

The 8 1/2-by-11 paperbound report is prepared by the regional banks for the open market committee every six weeks. It is officially called "Summary of Commentary on Current Economic Conditions by Federal Reserve District."

The Beige Book is the only document for the meeting that is available to the public. That is one reason newspapers give it prominent play. The more influential Green Book, with economic forecasts, and Blue Book, with staff suggestions for action by the committee, are withheld from the public for five years.

Beige Book data are collected by one or two people at each Fed bank. They quiz hundreds of business contacts to obtain anecdotal information about a region's economic activity.

Informal Procedure

One reason that the report isn't considered scientific: The Fed staffers may interview different people for succeeding surveys and ask different questions.

Even so, the book is useful insofar as it is a piece of the economic puzzle. Fed Chairman Greenspan likes the anecdotal information because it provides firsthand insights into the economy before the committee meeting. Mr. Coyne says.

Edward Boehne, president of the Fed's Philadelphia bank, finds it useful as "another input" on "what's going on in the economy."

The Boston Fed's Richard Syron also finds the regional reports very useful. In fact, his bank has an in-house supplement that rounds out the survey by quizzing academics in the region, says a spokesman.

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