The latest Beige Book data on qualitative economic conditions in the 13 Federal Reserve districts spread around the country was released yesterday. Our Beige Book Index counts the relative frequency of positive and negative terms used by the Beige Book in discussing the status of the economy and labor markets in each district. Generally speaking, this index correlates reasonably well with the growth of the economy, as shown in the chart below. The latest data suggests the possibility of a re-acceleration in growth in Q1 and Q2, though the index is definitely not recording the kind of strength it did at the peak for growth in 2018 and 2019.  Sign up for Bespoke’s “2020” special at the Institutional level to get full access to Bespoke’s economic analysis like the Beige Book Index.

One worrying observation was “job cuts or reduced hiring” at manufacturers in “a number” of districts; that would be consistent with the sudden decline in factory hiring in December per the most recent payrolls numbers. A paradox was also visible in the claim of “widespread labor shortages” despite “modest or moderate” wage increases; how can labor be truly scarce if its price isn’t rising briskly? Business contacts did note “solid” holiday spending along with “strengthened” residential markets and “moderately” expanded vehicle sales. All-told, the Beige Book signaled an improved pace of growth but by no means a dramatic acceleration in activity.

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