Fed June Beige Report Marks Price and Wage Increase : Planet Money : The Indicator from Planet Money The Indicator gives out the special Beigie Award eight times each year, and it's that time today! We are honoring the Federal Reserve branch that told the story of beef. Yes, premium cuts!
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Wagyu Steaks And Worker Shortages: The Beigie Awards

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Wagyu Steaks And Worker Shortages: The Beigie Awards

Wagyu Steaks And Worker Shortages: The Beigie Awards

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  • <iframe src="https://www.npr.org/player/embed/1004575901/1004600762" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

SYLVIE DOUGLIS, BYLINE: NPR.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

ROBERT SMITH, HOST:

They say you can't judge a book by its cover, so do not judge the Beige Book by its title. It is this amazing economic report that comes out eight times a year. It's made up of a dozen different various chapters, each one written by one of the 12 Federal Reserve banks spread out across our great nation. Each Federal Reserve Bank sends out a little fleet of economists to talk to business owners and workers in their district to get stories that illustrate what's really happening on the ground in different industries and businesses.

STACEY VANEK SMITH, HOST:

And here at THE INDICATOR, we like to read all the way through the Beige Book. And we find our very favorite anecdote, our favorite story from the Beige Book and, you know, give it an award.

(SOUNDBITE OF MUSIC)

SMITH: Ladies and gentlemen, welcome to the Beigie Awards. I'm your disembodied voice, Robert Smith, introducing the host of the program, Stacey Vanek Smith.

VANEK SMITH: Thank you. Thank you. As we all know, the Beige Book has just dropped. And, Robert, I have to say, this one was action-packed.

SMITH: Oh, yeah. Hollywood studios are fighting over the right to make the blockbuster movie out of this month's Beige Book. It painted a picture of an economy bouncing back quickly but still hitting some obstacles.

VANEK SMITH: We have more on that. Plus, we award the coveted Beigie right after the break.

(SOUNDBITE OF MUSIC)

VANEK SMITH: Welcome to the Beigie Awards. I'm your host, Stacey Vanek Smith.

SMITH: And I'm Robert Smith. There were two main stories in this Beige Book. The first is a story of jobs. Millions of people are unemployed, and yet the Beige Book was full of stories about businesses all over the country desperate - desperate - to hire workers. They're shorthanded and unable to meet demand from consumers.

VANEK SMITH: In a lot of places, that was translating into higher wages as companies started offering people higher pay to lure them into filling their open jobs. The Federal Reserve Bank of Cleveland wrote, quote, "one staffing company contact remarked that he turned away prospective clients that offered starting wages of less than $13 per hour because he will not be able to find anyone at that wage" - powerful stuff.

SMITH: It's amazing, Stacey, because we've talked for so many years about how to get wages up. And all of a sudden, just over the last six months, it's happening. It's happening right in front of our eyes. And, of course, when companies pay higher wages, they will often charge customers higher prices. And that was the second big story of this Beige Book. Prices were going up for everything from lumber to copper to PVC pipes. Specifically, they talked about the pipes. But it wasn't stopping people from buying.

VANEK SMITH: Exactly. And not only buying - buying more, bigger, better. The New York Fed, for example, noted that, quote, "there were some reports of a sharp rebound in demand for luggage and formalwear."

SMITH: You note it doesn't say people are going anywhere. It just says they're...

VANEK SMITH: No (laughter).

SMITH: ...Buying a lot of luggage and putting on their black tie and tails and just getting ready. That's how I feel.

VANEK SMITH: (Laughter).

SMITH: But that was not the phrase that most captured our hearts. No, the winning phrase, the best line in this entire Beige Book was a little bit meatier. And the Beigie goes to...

(SOUNDBITE OF DRUM ROLL)

SMITH: ...The Federal Reserve Bank of...

(SOUNDBITE OF ENVELOPE TEARING)

SMITH: ...Chicago.

(SOUNDBITE OF SONG, "MY KIND OF TOWN")

FRANK SINATRA: (Singing) This is my kind of town, Chicago is.

VANEK SMITH: And here, Robert, is the phrase that did it, quote, "grocery store sales remained healthy, and there were, again, reports of consumers trading up for more expensive items, such as premium meat cuts, finer wines and seafood." Congratulations, Chicago.

SMITH: Coming up to the stage is first-time nominee and first-time winner Chicago Fed economist Tom Walstrum.

TOM WALSTRUM: That was an interesting - very interesting anecdote. I agree.

SMITH: Tom...

VANEK SMITH: (Laughter).

SMITH: ...Clearly overwhelmed, is the main editor and project manager for Chicago's Beige Book.

VANEK SMITH: How does it feel to win a Beigie? (Laughter).

WALSTRUM: Oh, you know, we're super-excited to have won. You know, one of my colleagues who - actually, Martin, who helped write this winning sentence, he said that he had put in his list of goals for the year to win a Beigie.

VANEK SMITH: Oh, that is Martin Lavelle. And he and fellow economist David Oppedahl, hunched over, pen in hand, and they wrote that winning line.

SMITH: Premium meat cuts, finer wines and seafoods.

WALSTRUM: They both are good at writing good sentences. And then, of course, it's my job to make them as beige as possible.

VANEK SMITH: (Laughter) What does that mean?

WALSTRUM: Well, I mean, the Fed values its neutrality a great deal. And I think that ends up requiring you to use language that might be less colorful than what you're actually hearing from the people that you're talking to.

SMITH: This makes sense because these stories are from businesses and workers. And they're being used as data, so you have to take a little bit of the sparkle out of them. You have to make them a little more official. But here at THE INDICATOR, we wanted to find the color inside the beige wrapper.

VANEK SMITH: Yes, we did. Of course, the Fed's sources are anonymous. They wouldn't tell us who they talked to to get this information. But we did some sleuthing, and we tracked down a butcher near Chicago to ask him about the sentence.

SMITH: That sentence, again, quote, "consumers are trading up for more expensive items, such as premium meat cuts, finer wines and seafood."

BILL BEGALE: So my name is Bill Begale. I am the owner of Paulina Meat Market. I am a butcher in Niles, Ill.

SMITH: Niles is just outside of Chicago, and Bill says it's a very middle-class town, nice mix of people. And Bill's been working at Pioneer Meat Market (ph) since 1984. He started out trimming the meat.

BEGALE: They wouldn't even let me touch a beef tenderloin for, like, a year.

VANEK SMITH: Really? (Laughter).

BEGALE: They wouldn't let me touch it for, like, a year or two.

VANEK SMITH: Eventually, they let Bill touch the tenderloins, and he bought the whole shop back in 2006. Bill says he loves this place. It has been around since the '40s, and it has a lot of kind of quirky, old-timey character.

BEGALE: First thing you see is there is, like, a stand made out of wood with a pig head sticking out of it.

VANEK SMITH: (Laughter).

BEGALE: And the numbers are there. You got to take the number.

VANEK SMITH: (Laughter) OK, OK.

BEGALE: You got to take a number out of its mouth.

VANEK SMITH: OK, number out of the pig mouth - got it.

SMITH: Bill says as soon as lockdown started last year and all the restaurants closed, his business went nuts. Pioneer (ph) started offering curbside pickup and took a lot of phone orders, sometimes 150 in one day. And he says, yes, he has noticed lately that people are going for fancier cuts of meat.

BEGALE: We get a breed of cattle called wagyu. That's the one that - people call us now. Do you have wagyu?

VANEK SMITH: Really, wagyu steak?

BEGALE: I don't know if you've heard of it.

VANEK SMITH: Oh, yes. They get, like - they feed them beer and massage them.

BEGALE: Some of them, yes. Yes.

VANEK SMITH: OK.

BEGALE: And the price for that is, like, $30 more a pound.

VANEK SMITH: That's a lot more.

BEGALE: It is a lot more. But for a special occasion, if you wanted something for somebody, I would get one. There's no doubt about it.

VANEK SMITH: Why? What's the difference?

BEGALE: It's like butter. It melts in your mouth when you eat it.

SMITH: And Bill says that buttery steak has lots of people paying that pricey $30 a pound or even more. Bill says the prices of most of his meats have been going up recently.

BEGALE: I had to raise my prices four times in the last two months. You know how often I raised my prices before that? - once a year. But in the last two months, I changed them three or four times.

VANEK SMITH: Bill says prices for a lot of his meat are up around 70% in just the last couple of months. He says part of the reason is demand because restaurants are opening up all over the place, and everyone is competing over meat.

SMITH: Also, Bill says meat producers are having trouble finding workers. They're having to pay their people more. But Bill says higher prices haven't slowed down demand. People are still asking for that buttery wagyu. He says, yeah, the Chicago Fed and economist Tom Walstrum - they got it exactly right.

VANEK SMITH: Are you going to go out and - I feel like after the Oscars, you know, they go to all the fancy parties. What are you going to do? (Laughter).

WALSTRUM: We're going to have virtual high-fives over Zoom.

VANEK SMITH: That is the Beigies equivalent of the Vanity Fair party, Robert. Although personally, I think the Chicago Fed needs to order all the economists who worked on this Beige Book a round of wagyu steaks.

(SOUNDBITE OF MUSIC)

SMITH: That music means our time is up. Stay tuned for your local newscast. Thank you for joining us, and have a great night.

VANEK SMITH: This episode of THE INDICATOR was produced by Jamila Huxtable and Sam Cai. It was fact-checked by Michael He. THE INDICATOR is edited by Kate Concannon and is a production of NPR.

(SOUNDBITE OF MUSIC)

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