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The 'Ask Your Uncle' Approach To Economics

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The Beige Book is weird. It's an economic report released by the Federal Reserve every few months, but it doesn't have many numbers in it. Mostly, it's a bunch of stories gathered by talking to businesses around the country. A Fed economist once described it as the "Ask Your Uncle" approach to figuring out what's going on in the economy.

In the Beige Book released today, for example, we learned that:

  • Sales of pet supplies are "a bit soft" in the Western U.S.
  • Sporting goods sales are strong in New England.
  • Boat manufacturers and medical equipment firms in the St. Louis region are planning layoffs, but bakeries and firearms manufacturers are hiring.

Also, as in the real world, everybody always talks about the weather in the Beige Book — especially when it rains. In today's Beige Book:

  • Retailers told the Philly Fed that "excessive rain in June kept ... people away from stores, while some showed up just to 'hang out' at the mall."
  • A "large department store chain" told the Richmond Fed that "cold and damp weather, along with the payroll tax change, had constrained sales."
  • A "contact in South Carolina noted that heavy rains had damaged the regional wheat crop to the extent that sprouts were unacceptable for export."

The Beige Book does try to pull all this stuff together. At the top of the report, there's a bit of synthesis of how different sectors are doing. ("Manufacturing expanded in most Districts since the previous report, with many Districts reporting increases in new orders, shipments, or production.")

Still, much of the value in the Beige Book lies in all the weird, anecdotal details. Richard Fisher, president of the Dallas Fed, told us that beer sales at convenience stores, combined with reports from beer distributors, were one early sign of a slowdown in the homebuilding market before the crash.

In other words, collecting anecdotes — asking your uncle — really can be useful. "My uncles and aunts were very helpful in helping me learn some basic lessons in life," Fisher said.

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