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The Fed's Beige Book Versus GDP. Will The Real Economic Measure Please Stand Up?

WASHINGTON, DC—Construction and commercial real estate activity may be up according to the Federal Reserve's Beige Book but who can forget the GDP's dismal first quarter numbers?

By Erika Morphy | erikamorphy | | Updated on June 02, 2016
The Federal Reserve Bank in Washington DC The Federal Reserve Bank in Washington DC

WASHINGTON, DC—The Federal Reserve has released its latest Beige Book, a survey of private-sector business contacts within the 12 Districts that comprise the Federal Reserve’s system. This release covers activity from April through mid-May.

The timing — the coverage period is basically the start of the second quarter — of this Beige Book is particularly important, or perhaps better put, telling. See, the first quarter of 2016 was, for all intents, an economic dud, according to the official metrics. But to read through the Beige Book’s commentary, not only for CRE but other sectors such as retail, for example, one gets the sense it is describing an entirely different economy than what the Bureau of Economic Analysis captured in its quarterly numbers.  This is not to say the Beige Book is unduly optimistic: there were enough comments to suggest that the industry is still facing challenges.

But it is world’s apart from the official US Gross Domestic Product numbers for the year, which simply put, have been terrible.

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