Making your own version of the Fed’s Beige Book
Jeremy Hobson: The economy is improving in every region of the country. That’s the latest word from the Fed’s Beige Book, which was released yesterday afternoon. Now, if you’re not familiar with the Beige Book, I don’t blame you.
So here to de-mystify it for us is David Brancaccio from the Marketplace Economy 4.0 team, which looks at how the economy can better serve more people. Hi David.
David Brancaccio: Hello there.
Hobson: So we’ve reported on the Beige Book before; basically it’s a survey of business attitudes from around the country. How do they actually do it?
Brancaccio: Yes, it’s put together by all 12 of the regional Federal Reserve banks, and we called to find out. They say they use technology to do this — a telephone, mainly. They call business professionals, factory owners, economists — not with fancy social science questions. The Fed calls up and says, “Yo, what’s up? How’s things by you?'”or words to that effect. It’s as simple as that. So easy that I thought I’d try to put together not a Beige Book, but my own Brancaccio Book.
Joey Sanchez: I guess the first thing most people would say is ‘It’s terrible!’
Yeah, that’s Joey Sanchez, who runs Caboots, a custom cowboy boot company in El Paso, Texas. Federal Reserve Region 11, by the way. So nothing scientific in these interviews, but you find out something useful about the economy.
Sanchez: $500 boot or the mid-priced boot, that’s not what’s popping right now — it’s a high-end boot.
A high-end western boot’s got fancy inlays, maybe something, an alligator — he says are particularly popular with his high-end customers in Russia, because they go for about $10,000 a pair. But the American middle class are still not doing much buying in their price range.
Hobson: So from Federal Reserve Region 11, David, you find an interest in high-end shopping. What else?
Brancaccio: So I checked in on current business conditions in another Fed region, number 2 here in the east. I call up Kelly Conklin, who runs a custom cabinet-making factory in Bloomfield, N.J., Foley Waite Associates. The typical order he gets now:
Kelly Conklin: Cabinetry for a library or an expensive dressing room. Those would be one part of a through gut renovation five years ago, and now it could be the whole project.
So signs of life he’s seeing now, but what he told me the economy needs now is a sense of confidence. He brought up political gridlock in Washington as a barrier to confidence. And in the end, I think that’s why the Fed’s Beige Book — the real one — is actually a useful economic indicator. You can learn a lot from just asking.
Hobson: Marketplace Economy 4.0 correspondent David Brancaccio. Thanks David.
Brancaccio: You bet.
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