Reaction to the Fed’s Latest Beige Book: “Uh-Oh”

By at 17 January, 2024, 11:24 pm

by Raymond J. Keating –

What’s the deal with the Fed’s Beige Book?

The Federal Reserve describes its Beige Book as follows: “The Beige Book is a Federal Reserve System publication about current economic conditions across the 12 Federal Reserve Districts. It characterizes regional economic conditions and prospects based on a variety of mostly qualitative information, gathered directly from each District’s sources.” It’s also noted: “The Beige Book is intended to characterize the change in economic conditions since the last report.”

So, it’s a survey from various sources to get an idea of how the economy is faring. In the toolbox of the economist, the entrepreneur, and the investor, it’s one of many tools to gauge the health of the U.S. economy.

The current Beige Book opens: “A majority of the twelve Federal Reserve Districts reported little or no change in economic activity since the prior Beige Book period. Of the four Districts that differed, three reported modest growth and one reported a moderate decline.”

At the risk of getting too deep into the technicalities of economics, my reaction to this is: Uh-oh. Indeed, anytime I come across information that points to much of the economy stagnating, “Uh-oh” is my reaction.

But let’s put this in perspective.

You could say that our economy has been in a long-run battle between the private sector, where entrepreneurs, investors, businesses and workers are pushing for innovation and growth, and government, which overwhelmingly is focused on undermining the private sector via uncertain tax policies, increased regulatory dictates and costs, protectionist trade policies, an expanding government sector, and misguided monetary policies.

When you think of the economy in these terms, it’s rather amazing what entrepreneurs, businesses, investors and workers have managed to accomplish. At the same time, though, there should be little doubt that government’s undermining of the private sector has taken a real toll, and that is perhaps most evident in under-performing economic growth the U.S. has experienced since 2007.

So, the fact that the private sector recently fought off a recession, even as one has been widely predicted and expected, again, has been quite an amazing feat. However, this accomplishment doesn’t mean that the economy has been robust, nor does it mean that we’re out of the woods – as this latest Fed Beige Book reminds us.

We all hope that private sector resiliency continues to hold, or win out. But wouldn’t it make sense for our elected officials to put a stop to this war on the private sector, and instead, support entrepreneurship, investment and growth via sound policies of tax and regulatory relief, free trade, restrained government spending, and sound monetary policy focused on price stability?

If not, there might be more “Uh-oh” moments going forward.

But let’s end on a positive point, as it was noted in the Beige Book: “Overall, most Districts indicated that expectations of their firms for future growth were positive, had improved, or both.” Yes, fight the good fight.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist and The Weekly Economist II: 52 More Quick Reads to Help You Think Like an Economist.


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