Keeping Tabs on the Fed

By Nandagopal Nair
Columbia Journalism School C’13 

Covering the Federal Reserve is a double-edged sword. On one hand, every statement, speech or sound bite emerging from the Fed has the potential to move markets. When the Fed speaks, a front-page story is almost always in play. On the other hand, the Fed and its 12 regional banks gather, process and release such a vast amount of information that it can be difficult for one reporter to absorb it all. An important story can get lost easily.

That’s why it’s essential for reporters covering the Fed to be familiar with the bank’s regular reports and releases and what can be gleaned from them. Fluency in Fed-speak can help ensure a reporter hasn’t missed a new outlook on the economy or a significant change in thinking about inflation.

Here are some of the Fed’s key releases and how reporters can use them to write better stories.

The Beige Book

The Summary of Commentary on Current Economic Conditions, better known as the Beige Book, is an overview of the economic health of each of the Fed’s 12 regional districts and the country as a whole. It includes largely anecdotal information on how several sectors of the economy have been holding up.

The Beige Book is compiled eight times a year based on reports from banks, feedback from businesses and insight from economists and other market watchers. The Fed releases the report about two weeks before each monetary policy meeting so that it can be taken into consideration during its assessment of the benchmark interest rate.

The Beige Book is organized first by region, then by economic sector. A reporter interested in manufacturing in the Cleveland area can flip quickly to the same area of the report each time it’s released. Other sectors include consumer spending, retail, tourism, real estate, energy and finance. The report also offers information on regional employment, wages and prices.

The Beige Book allows reporters to learn quickly – if retrospectively – how a natural disaster, for example, impacted the 12 regions differently.

FOMC Policy Statements

The Federal Open Market Committee, which sets the benchmark interest rate, releases a policy statement after each of its eight scheduled meetings per a year. The statement is typically brief (about a page, if that). It summarizes the FOMC’s decision and its reasoning.

The statements provide some insight into the Fed’s economic projections and context for its policy decisions. Unemployment trends, inflation trajectory, consumer spending patterns and the investment climate are all captured in this succinct statement. Scrutinizing the language of the statement can offer reporters clues about the timing and magnitude of future policy actions. The summary of the votes for the decision also offers valuable insight into the divisions if any within the FOMC.

FOMC Minutes

The FOMC releases the minutes from its meetings about three weeks after they end. The minutes detail the committee’s deliberations at the policy meeting but offer more detail than the policy statement. They’re a one-stop shop for the latest data, trends and forward-looking indicators.

Reporters might find red flags for the jobs recovery, hints about where the manufacturing sector is weakest, or updates on what’s holding back the housing market. The minutes also offer some reliable signals about the future. Automakers’ schedules hint at car sales, consumer sentiment help predict consumption, and inflation trends forecast treasury yields.

The section on the participants’ views provides a summary of the FOMC’s discussion, and it’s a rich source of anecdotal evidence about the state of the economy. The concerns raised by Fed board members about a slowdown in shipping activity or a cutback in energy production can be starting points for stories about either sector.

Quarterly Economic Forecasts

The Federal Reserve publishes quarterly forecasts with the minutes from its January, April, June and October meetings. The forecasts include economic projections made by members of the Board of Governors and Federal Reserve Bank presidents. The release also offers a detailed breakdown of the participants’ assessments of appropriate monetary policy.

Regional Websites

The Fed’s regional banks maintain separate websites that are valuable resources for information regarding Fed policy and the economy. Here are some highlights:

New York

The Federal Reserve Bank of New York is the most influential of the twelve regional banks because it executes monetary policy on behalf of the central bank. The site provides a series of charts on transaction data relating to open market operations and securities lending. It’s also a good source for historical data on foreign exchange rates.

St. Louis

The site is best known for its economic and financial database FRED, which allows users to download, graph and track more than 60,000 domestic and international economic variables.

Philadelphia

This site is the gateway to two influential economic reports: the Survey of Professional Forecasters and the Business Outlook Survey. It also gives users access to a real-time dataset of macroeconomic variables.

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