FED: October Beige Book Warrants Close Attention As FOMC Eyes Anecdotal Steers

Today's release of the Fed's Beige Book (1400ET), which collates "anecdotal information on current economic conditions" in each of the 12 regional Fed districts, takes on a little more importance than usual as the FOMC assesses its options ahead of the November decision. The same can in retrospect be said about September's edition, which was cited by Chair Powell as a factor in the decision to cut 50bp rather than 25bp. 

• The September Beige Book highlighted that growth was flatlining or declining in 9 of 12 districts - up from 5 in July's edition. Declining activity: Philadelphia, Cleveland, Richmond, Atlanta, Minneapolis; Flat: New York, St. Louis; Kansas City, San Francisco; Increased: Boston, Chicago, Dallas. That probably helped steer the broader Committee to an outsized cut. The report also implied a downgrade in labor market conditions vs July's edition, describing employment having risen "flat to up slightly" vs  rising at a "slight pace" previously.
• Given volatile and sometimes contradictory data, FOMC members may weight the input of regional contacts a little more in their monetary policy reasoning - Chicago Fed Pres Goolsbee said after the 50bp cut that at moments of transition in the economy such as the one the US is experiencing now, it's extremely helpful and informative to go out and interact with people in real time (rather than data with a one week, month or quarter lag).
• Some recent examples of cited anecdotes that lean in a slightly hawkish direction on rates: Gov Waller this month noted cautiously that "my business contacts believe that there is considerable pent-up demand" for "big-ticket" items by consumers anticipating lower rates. Gov Bowman in September said "My contacts also continue to mention that they are not planning layoffs and continue to have difficulty hiring".