As noted before, the Federal Reserve’s Beige Book collection of local bank district anecdotes are fascinating for all the wrong reasons. What is revealed is not the state of the economy, but rather the state of how policymakers perceive or often wish the economy was at various points. If the 2007 Beige Books are a collective case study in denial, those in 2008 are of borderline delusion.
Everything had by summer 2008 turned or rolled over, including oil prices and, relatedly, Chinese currency appreciation. The global economy did, too, but you wouldn’t really know it from the Beige Book. The version from September 3, 2008, does not onceinclude the word “recession.” It does, however, mention the word “slow” (or one of its semantic derivations like “slowing” or “slower”) 62 times.
The same is true for the Beige Book published on October 15, 2008, already after the initial panic had concluded. The word “slow” appears 63 times, while again not a single mention of “recession.” Finally, the word shows up just once in the December 3, 2008, Beige Book, but only in reference to the energy sector in the 11th (Dallas) District, talking about “recession-reduced industrial loads” pertaining to just natural gas production.
The NBER had even declared two days prior to that last 2008 issue the “official” cycle peak dating back to December 2007. Yet, the overall perception one could have easily formed from reading these official, anecdotal scorecards was a mysterious but relatively unconcerning general slowing in the US and global economy. You could make the case that policymakers watered down the bad parts so as to avoid further panicky tendencies, but the complete transcripts of the actual FOMC meetings show instead these economists had little to no idea the extent of economy-wide damage and what it really meant.
In that regard, the Beige Book didn’t help at all, and if it did influence opinion it was in the wrong direction.
