The Beigies : The Indicator from Planet Money Welcome to the Beigies, the only awards show honoring the best economic stories in the Fed's Beige Book.

The Beigies

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Eight times a year, the Federal Reserve publishes a report about the economy called "The Summary Of Commentary On Current Economic Conditions," which is a terrible name. So they came up with a much more exciting name for it.


"The Beige Book."

VANEK SMITH: "The Beige Book."

SMITH: Beige is exciting to the Federal Reserve. And beige - they name it this because the cover of the book is exactly the color of the walls in your very first apartment. And we at Planet Money, we love "The Beige Book" because the report has almost no numbers in it. There are no graphs whatsoever. It's just a collection of little stories.

VANEK SMITH: And not even stories. Just, like, anecdotes. Like, one line in "The Beige Book" says a trucking company said that the labor shortage had left many trucks sitting idle.

SMITH: And sometimes these stories are really well-written. And sometimes we share them with each other. And it got us thinking that someone should honor these tiny, little economic storytellers in some way.

VANEK SMITH: Yes, like, give an award out for the best story or the best anecdote in "The Beige Book."

SMITH: I mean, it's a federal report, comes out eight times a year. Who is going to give an award for that?


VANEK SMITH: Welcome to the first Beigie (ph) Awards, brought to you by THE INDICATOR from Planet Money. I'm Stacey Vanek Smith.

SMITH: And I'm Robert Smith. Today on the show, we read through "The Summary Of Commentary On Current Economic Conditions," "The Beige Book," and tell you the story that best captured our economic imagination - the Beigie Awards.


VANEK SMITH: Here is how "The Beige Book" works. We often talk about the Federal Reserve, the central bank of the U.S., as this one big thing.

SMITH: But that's not true. The Federal Reserve is broken up into 12 distinct districts. There's the Federal Reserve Bank of San Francisco, which represents most of the West. There's the Federal Reserve Bank of New York, Federal Reserve Bank of Kansas City.

VANEK SMITH: And eight times a year, each of these districts contributes a chapter to "The Beige Book." And they put in the best stories from their districts.

SMITH: Yeah, so they can all see what's going on in each other's districts. And literally each district has a team or even just one person who calls up a bunch of businesses and people and experts and ask them, like, literally, like, what's up? What's happening?

VANEK SMITH: And some of them find these amazing stories that really reveal interesting things about the economy. The latest "Beige Book" came out yesterday.

SMITH: We were very excited.

VANEK SMITH: And here are the Beigies (ph).

SMITH: The Beigie Awards. All right, let's go to third place. The third place goes to the best future trendspotting. The Beigie goes to the Federal Reserve Bank of...


SMITH: ...Cleveland.

VANEK SMITH: Cleveland.

SMITH: Cleveland had this wonderful little line which was about restaurants. They were talking about restaurants. And they said a fast food chain observed that the average revenue per transaction from recently installed self-service kiosks was higher than the transactions generated by cashiers. So literally people buying from a little screen, I imagine, were ordering more fast food than if they were talking across to a cashier.

VANEK SMITH: This makes a lot of sense to me because if you want to supersize something, you want to do it in front of a computer. There's not the look of shaming that you might potentially get from a human being if you want to supersize something or order, like, maybe four fries with a burger because maybe you just like the fries best.

SMITH: And you don't want to have to look someone in the eye when you do that.

VANEK SMITH: You don't have to explain yourself. You just get the fries and move on.

SMITH: That's what I like with "The Beige Book." It tells you that, like, this is working and other people have noticed this. So now we are to the second place, the second place in the Beigies.

VANEK SMITH: And if for any reason the winner of the Beigie Award cannot perform his or her duty as the Beigie winner, the second place winner will take that position.

SMITH: It is a very dramatic moment. The second place, the second place for the Beigies, goes to...


SMITH: ...Boston.

VANEK SMITH: Beantown.

SMITH: And Boston had this great aha moment for us that they wrote about in "The Beige Book" which might explain why wages have been rising so slowly even though unemployment is so low across the nation and in Boston.

VANEK SMITH: And this is a big economic mystery that everybody's talking about right now. I mean, unemployment's so low people are trying to hire like crazy, and that could help be explained by this moment in "The Beige Book." They're talking about a manufacturing company. And they say, quote, "another industrial firm had 20 unfilled openings in a plant with a hundred employees and said they were making up for it with significant overtime. When asked why they didn't increase wages to fill the openings, the contact said they would have to pay all the existing workers more, which would be uneconomic."

SMITH: So they're making everybody work overtime...


SMITH: ...Because they're afraid of giving everyone a raise. So they can't raise wages on just the new people that they desperately need.

VANEK SMITH: Yes, exactly.

SMITH: Which is fascinating because, I mean, this is something that data doesn't often capture. We like to think that there's this direct relationship between wages and employment. But of course there's all these weird things in the economy - contracts and special cases...

VANEK SMITH: And office politics.

SMITH: ...And office politics that just makes it hard to give new people raises.

VANEK SMITH: Which brings us to our winner, the winner of the first Beigie Award.

SMITH: The first place award, the first ever Beigie for the most beigely (ph) evocative detail, goes to the Federal Reserve Bank of - people are so nervous.



VANEK SMITH: "Moonlight." Sorry.


SMITH: Crash. People are so upset. Philadelphia.

VANEK SMITH: Philadelphia, city of brotherly love.

SMITH: Federal Reserve Bank of Philadelphia. And here to accept the award is the president of the Philly Fed, Pat Harker.

PATRICK HARKER: This is really exciting. We're very honored. We're looking forward to coming down the beige carpet to accept it.

SMITH: So the line that really got us, the line that won you this award, is this line right here - the abnormally cold December temperatures lifted sales of warm weather apparel, and long lines of last-minute shoppers were noted at mall jewelry stores. But we want to know the way this works. I mean, do you have a staffer who, you know, has an Orange Julius in one hand and a big shopping bag in the other and is walking through the mall and sees a long line at the jewelry store and says, oh, I've got to - I've got to tell the - I've got to tell the guys back at the office about this?

HARKER: No, no, no. It's - we make sure it's more than one person in one store buying one particular piece of jewelry.

VANEK SMITH: So what can we - why did this make the cut? Why is this line in there? What was it about this that seemed compelling or noteworthy?

HARKER: You know, people felt good. Good enough, at least, where they're out buying jewelry. Don't know how expensive it was, but they are - they were out buying jewelry.

SMITH: I mean, that makes sense. People are confident. They're buying something they don't actually need. No one needs jewelry.

VANEK SMITH: Something that's expensive.

SMITH: Yeah. And they're feeling pretty good about their future. That's how I read this.

VANEK SMITH: Of course, they could just go out and get actual sales data from actual jewelry stores.

SMITH: Can you make a case for the usefulness of "The Beige Book"? I mean, in this day and age we have so much data. And you could certainly wait till the end of the year and find out exactly how much jewelry was sold in the entire nation. You don't need this little story.

HARKER: Right.

SMITH: What is the point of "The Beige Book" these days?

HARKER: So if you think about us on the Federal Open Market Committee, the policymakers, we have to make decisions. We have to make decisions at every meeting. And data by its very nature - you just said it - is backward-looking. It tells us what happened. It doesn't give us real-time information or at least projections forward about what people are thinking, what they're feeling - are there animal spirits or are there not? And again, survey work can help us a little bit. But these are stories - for example, trying to understand, as you alluded to earlier, what's really happening with wages, right? What's going on? Why aren't we seeing the growth that we would normally expect? You're not going to get that out of looking at numbers. You really have to talk to people and understand what's happening.

SMITH: And I love this idea that when it comes right down to it, economic policy in the United States is determined by a bunch of people in a room who have read little stories, who have these little ideas in their minds, boots on the ground, anecdotes about the economy. Yes, they use data. But it's also this I heard a guy who said a thing, who saw a thing...

VANEK SMITH: Who noticed a long line at a mall jewelry store.

SMITH: Yeah.

VANEK SMITH: And we should say in this case the person who wrote up this entry for the Philadelphia Fed is an economist named Paul Flores.

SMITH: Will you tell him he is the winner of the Be igie Award from Planet Money INDICATOR?

HARKER: I will tell him. And I will find something beige to hand to him.


VANEK SMITH: Thank you. If you have an idea for an indicator, send us an email - This podcast is produced by Darius Rafieyan and edited by Jacob Goldstein.


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