UNIDENTIFIED PERSON, BYLINE: NPR.
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STACEY VANEK SMITH, HOST:
Hey, everyone. Stacey here, and I am joined today by our wonderful editor, Paddy Hirsch. Hey, Paddy.
PADDY HIRSCH, BYLINE: Hello, Stacey. Thank you for having me. I'm deeply honored.
VANEK SMITH: (Laughter) It's an honor to have you.
HIRSCH: Well, it's been a very big week with a lot of big stories. But, of course, probably the biggest story is that the new Beige Book dropped this week.
VANEK SMITH: (Laughter) Maybe not for most people. Around THE INDICATOR, this was very big news. And I should explain what it is before we get any further. About eight times a year, the Federal Reserve publishes a report about the economy, which is called the Summary of Commentary on Current Economic Conditions. It's a very long title. Everybody just calls it the Beige Book because its cover is beige.
HIRSCH: It is beige. Yes, this is the report from the Federal Reserve Bank of the United States, which, of course, is broken up into 12 distinct districts. It's not just one thing. It's 12 things. There's the Federal Reserve Bank of Philadelphia, the Federal Reserve Bank of Dallas, the Federal Reserve Bank of San Francisco, which represents most of the West, and each of these districts contributes a chapter to the Beige Book.
VANEK SMITH: And in these chapters are little collections of anecdotes from businesses and industries all across the country, everything from big corporations to mom and pop shops. And to get these stories, the economists at these regional banks actually call up local businesses or just drop by and say, like, hey, what's going on?
HIRSCH: Yeah. And they call these businesses, they call them their contacts. And some of the stories that they get from them are so great, so good, that here at THE INDICATOR, we have created an award for our favorite Beige Book entry.
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VANEK SMITH: Welcome to the Beigie Awards, brought to you by THE INDICATOR FROM PLANET MONEY. I'm Stacey Vanek Smith.
HIRSCH: And I'm Paddy Hirsch. And today on the show, we go through the economic stories around the country to find the good, the bad and the best of Beige.
VANEK SMITH: (Laughter).
HIRSCH: Welcome to the Beigie Awards for the first Beige Book of 2021. Now, the Beige Book comes out eight times a year, so normally the stories don't change that much. But right now, things are moving very fast in this economy. And this latest Beige Book was super-interesting.
VANEK SMITH: Yeah. And there was actually a real silver lining running through this Beige Book that we did not see in the last Beige Book. Most economists and businesses felt like the economy would really start to bounce back towards the end of this year. People were seeing a light at the end of the tunnel.
HIRSCH: Yes, light at the end of the tunnel. But there was also a lot of pain. The travel and tourism industries are decimated. Restaurants, theaters and other businesses are really struggling to survive. And one of the observations that really struck us in this Beige Book was something that came to us from the Federal Bank of Minneapolis, a hotel owner in central Minnesota who'd had to close the hotel pool and stop his breakfast buffet service. He was quoted as saying, "why would anybody want to stay?"
VANEK SMITH: Yes, there was a lot of pain, but there were also some industries that were doing OK and some that were actually flourishing. Exports and imports really stood out for that reason. The San Francisco Fed, in fact, reported that shipments of almonds are at record highs. Apparently, California's farmers are exporting wheat and raisins like crazy.
HIRSCH: Which brings us to the award, our favorite anecdote from the Beige Book, the one that gives us the keenest insight into one part of the economy.
VANEK SMITH: The Federal Reserve Bank of Boston looks tense. The Dallas Fed economists are all holding hands, leaning forward in anticipation.
HIRSCH: And the Beigie goes to...
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HIRSCH: ...The Federal Reserve Bank of Richmond.
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VANEK SMITH: Economist Sonya Ravindranath Waddell is accepting the Beigie. She oversaw Richmond's Beige Book entry.
SONYA RAVINDRANATH WADDELL: Thank you very much. We're very excited for this award.
VANEK SMITH: I mean, really on the whole, Paddy, this whole entry from Richmond was fantastic.
HIRSCH: It really was.
VANEK SMITH: But there was one paragraph that really stood out to us, really spoke to our hearts. It is from the ports and transportation section.
HIRSCH: Yes. If you let me quote, "shipping volumes remained near record highs and were substantially above year-ago levels. Contacts reported increases in furniture, toys and produce imports, while meat and grains were strong on the export side. One contact noted that the rush to get empty containers back to Asia for future shipments is limiting container availability for exports."
VANEK SMITH: That's economic poetry right there. That's beautiful.
HIRSCH: (Laughter) Gorgeous.
VANEK SMITH: So I asked Sonya about this, and she actually said this little paragraph tells us a lot about what is going on in the whole economy right now, namely that goods are winning, and services are really struggling.
WADDELL: You know, for a couple of years, maybe even a decade, there was a lot of discussion about consumers buying fewer goods, wanting more experiences. So I think, you know, in the last year, we've done the exact opposite. So to the extent that we were paying money for trips or, you know, experiences, we've been spending that money on goods, right? So we have a large portion of the population who can do their jobs from home and who have not seen a hit to income and so who can take the money that they would have spent on the trip that they didn't take and spend it on a home improvement or a new couch.
HIRSCH: And this makes sense, right? Because of regulations and state guidelines and, frankly, just personal caution, we're really not spending money on services and experiences in the way that we used to, like eating out and travel, going to the theater, getting a massage, exercise classes. We're really not doing that kind of thing so much.
VANEK SMITH: Yeah. And instead, we're spending that money on, like, stuff - furniture, cookware, clothing, electronics. And Sonya told me that she herself has been living this.
WADDELL: I will tell you - and you're free to put this on the radio - I have not gotten a haircut since, I want to say, 2019. Or it might have been January of 2020.
VANEK SMITH: Same. Same. It's, like - it's getting, like, pretty feral back there (laughter).
WADDELL: Yeah. It's long. That's why I've got the ponytail on. My hair is definitely getting long. I used to have bangs.
HIRSCH: Sonya estimates she would have gotten about three haircuts in a normal year - and you think how much a haircut can cost - and instead, she got none. And so her - she's got plenty of cash to spend now. And she and her husband splurged on an outdoor heater so that the family could hang out in the backyard throughout the winter.
VANEK SMITH: At least that was the plan. They ordered this heater back in November, and it still has not arrived.
HIRSCH: And Mike Coleman is pretty sure he knows why.
MIKE COLEMAN: It's just a bottleneck.
HIRSCH: Mike is president of CV International. It's a shipping logistics company based in Virginia, right in Sonya's district. And Mike says the Beige Book is right on about his industry.
VANEK SMITH: Yeah. He says the shipping business is booming. We are buying so much stuff, there is not enough room on the ships for everything. And there's not enough room in the ports for all the ships. There are these big traffic jams in the port. Ships are floating there for days, just brimming with stuff that people have ordered, waiting their turn.
COLEMAN: The increase in volume came so quickly that, you know, trucking companies, warehouses - no one had time to staff up. So we have - we're running into a lot of delays. We're sort of in the Wild West when it comes to shipping.
HIRSCH: The Wild West, yes. And prices have gone wild as well. Mike says freight rates are as much as four times what they were a year ago. And this frenzy at the ports shows no sign of slowing down.
VANEK SMITH: Economist Sonya Ravindranath Waddell says this situation also highlights one of the big themes of this Beige Book and of this recession - just how divided the country's economy is. All those ships filled with stuff people are buying, those people are probably people who still have their jobs, who can work from home and whose employment situation and income haven't really changed. But then, she says, there are the millions of people who are unemployed who have not been able to pay rent or can't afford groceries, people who are losing the businesses that they've built and watching their livelihoods just dissolve.
HIRSCH: And Sonya says she doesn't expect this to change for a while, at least not until the second half of this year. Hopefully by then, she says, vaccines will be plentiful, and businesses can reopen. We can eat inside again, go to the movies, shake hands.
VANEK SMITH: Yeah. Hopefully life and the news will be a little bit Beiger by then.
HIRSCH: A little bit Beiger - yes, indeed. But a huge congratulations to Sonya and her team at the Richmond Fed.
VANEK SMITH: Like, I don't know, how does it feel to win a Beigie?
WADDELL: It feels great. It feels great. So I don't know that I have the speechmaking abilities of Halle Berry or Sally Field, but yeah, we're really excited about it. And I want to say this, too, you know, in addition to the team that has spent countless hours on the phone and video in the last year, I really need to thank our contacts. So we have so many...
HIRSCH: I'm so sorry. We're out of time. But congratulations, Sonya. And we want to thank all of the Federal Reserve banks across the United States for their fantastic work.
VANEK SMITH: Yes. See you next time.
This episode of THE INDICATOR was produced by Dave Blanchard and fact-checked by Sean Saldana. THE INDICATOR is a production of NPR.
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