Beige Book looks hawkish

Growth deemed strong, inflation not beaten.

A review of the latest Beige Book suggests reasons to expect a hawkish tone from tomorrow’s Fed announcement - and perhaps more particularly in the presser that follows the announcement - due to very strong economic assessment in Beige Book.

Photo by Shinta Kikuchi on Unsplash

A long history of textual analysis of the Beige Book suggests confidence in the economy was assessed to be well above average levels going back to 2008 - in our series it reached the highest level since 2022.

Another way of measuring this is to isolate terms denoting economic strength and terms denoting economic weakness, and plot as two series. This approach gives a similar picture, with the strength terms rising sharply in the January report - available in the longer paid report.