The Fed's Beige Book"Reports indicated that economic activity weakened in September across all twelve Federal Reserve Districts. Several Districts also noted that their contacts had become more pessimistic about the economic outlook.
"Consumer spending decreased in most Districts, with declines reported in retailing, auto sales and tourism. Nearly all Districts commenting on nonfinancial service industries noted reduced activity. Manufacturing slowed in most Districts. Residential real estate markets remained weak, and commercial real estate activity slowed in many Districts. Credit conditions were characterized as being tight across the twelve Districts, with several reporting reduced credit availability for both financial and nonfinancial institutions. District reports on agriculture and natural resources were mostly positive, although adverse weather associated with hurricanes Ike and Gustav negatively affected the South and the Midwest.
"Inflationary pressures moderated a bit in September. While several Districts noted continuing pass-through of earlier price increases for metals, food and energy, most indicated that cost pressures had eased. Labor market conditions weakened in most Districts, and wage pressures remained limited. Several Districts reported lower capital spending or reductions in capital spending plans due to the high level of uncertainty about the economic outlook or concerns over the availability of credit."
Thus opens the most recent edition of the Federal Reserve Board's Beige Book, which is published eight times a year. As explained (pdf) by Rubén Hernández-Murillo, an economist in the Research division of the Fed's St. Louis branch,
The Beige Book, officially called the Summary of commentary on current economic conditions, is an anecdotal description of economic activity in each of the 12 Federal Reserve districts. To produce the Beige Book, each Federal Reserve Bank gathers information about its district through a network of business contacts across many industries, such as manufacturing, services, real estate, banking and agriculture. The contacts are promised anonymity in return for accurate, honest and current information. Staff members at one of the 12 Federal Reserve banks compile the district reports into the national summary of economic conditions. The Beige Book is released two weeks prior to every scheduled meeting of the Federal Open Market committee. ...If you would like to learn more about the information value of the Beige Book you can read a recent research report by Hernández-Murillo and three co-authors here (pdf).
Although the Federal Reserve relies, for the most part, on formal data and sophisticated statistical methods for conducting monetary policy, anecdotal information such as that collected for the Beige Book is also used to confirm or to help understand trends that arise from the formal data. Formal statistics, such as the series on Gross Domestic Product (GDP) and the Consumer Price Index, do not provide a perfect picture of the economy, and informal or anecdotal information yields insight into the formal statistics to help fill the gaps. For example, except for financial indicators, most formal data are released with a lag and, therefore, do not necessarily present an up-to-date picture of the economy. The anecdotal information collected from the people who are actually making day-to-day business decisions provides timely information about some of the trends in the data that may be occurring.