Economic survey of the Federal Reserve System of the USA

Economic survey of the Federal Reserve System of the USA (known as Beige book) – this economic index is based on figures of manufacture, services, agriculture, labor market and reals estate market. Beige book review is conducted by the US Federal Reserve System eight times a year, two weeks prior to congress of the Federal Open Market Committee (FOMC), at 2 p.m of New York time on Wednesdays.

Beige book index description

Twelve Federal reserve banks of the USA conduct overall estimation and provide an economic review with the purpose of examining and forecasting outlook for the state economy. Thus, economic review accumulates report of each represented bank about economic conditions in the country. The data of report conveys actual situation by the present moment and do not encompass quality indicators. However, quantity data can assist in making judgment about economy in general and forecast prices in Forex market as well.

Beige book is one of the important figures watched by the Federal Open Market Committee in the process of making decision on interest rates. High figures in the report will with a high probability make Committee inclined towards raising interest rates. Low figures can lead to decline of interest rates arranged with the purpose of fostering situation in the economy.

Although at first sight Beige book is not a crucial figure for the market, it can be used in complex analysis. For example, if a trader expects raise of interest rates, wages and prices containing in this report should be watched. That is to say, when high figures are present, there is a possibility of raise of interest rates and consolidation of national currency. On the contrary, decline of figures in Beige book indirectly implies unstable economic situation and in the result the possibility of decrease in national currency rate towards foreign rates.

Historical reference about Federal Reserve System of the USA

Beige book started its way as economic indicator in 1985 when the former Dow Jones reporter Paul Cox the first time requested this report for analysis.

In the middle of 2008 year dropdown in the US economy took place. At that moment Beige book review recorded decline of figures in 9 from 12 districts. Consumer activity declined, situation on labor market became worse, credits became less available for most part of the US citizens and in the result decline of interest rates was expected. On its next congress Federal Open Market Committee decided to soften its monetary policy and decrease interest rates. And only by the end of 2008 economic situation in the country was stabilized and figures of Beige book started growing.