With everyone so scared about the Federal Reserve and Janet Yellen wanting to raise interest rates, the Federal Reserve’s each and every move and statement is watched closely by the public. Wednesday’s economic reporting included the Fed’s Beige Book report.

What investors need to consider is the Beige Book is a quasi-Fed report – and is quite different when compared to the FOMC Minutes. They are both Fed reports, but the minutes are internal and ‘the book’ is mostly external.

The Beige Book is a report which gathers information on current economic conditions in each district through reports from (Fed) bank and branch directors and interviews with key business contacts, economists, market experts, and other sources. The Beige Book summarizes information by district and sector.

The FOMC Minutes is the official report of what took place inside of each FOMC meeting, with a two week lag, offering insights on how members saw the economy and monetary policy at that time.

Each Beige Book summary of the twelve district reports is prepared by a designated Federal Reserve Bank on a rotating basis. The April 13 Beige Book was prepared at the Federal Reserve Bank of Chicago. and it was based on information collected on or before April 7, 2016.

Again, each Beige Book summarizes comments received from business and other contacts outside the Federal Reserve — it is not a commentary on the views of Federal Reserve officials.

The April 12 Beige Book summary said:

Reports from the twelve Federal Reserve Districts suggest that national economic activity continued to expand in late February and March, though the pace of growth varied across Districts. Most Districts said that economic growth was in the modest to moderate range and that contacts expected growth would remain in that range going forward. Consumer spending increased modestly in most Districts and reports on tourism were mostly positive. Labor market conditions continued to strengthen and business spending generally expanded across most Districts. Demand for nonfinancial services grew moderately overall. Manufacturing activity increased in most Districts. Construction and real estate activity also expanded. Credit conditions improved, on net, in most Districts. Low prices weighed on energy and mining output as well as prospects for agricultural producers. Overall, prices increased modestly across the majority of Districts, and input cost pressures continued to ease.

The FOMC Minutes of the March 15 to March 16 meeting was released on April 6, 2016. Its introduction of the overall economic situation at that time said:

The information reviewed for the March 15-16 meeting suggested that labor market conditions were continuing to improve in the first quarter, and that the pace of expansion in real gross domestic product (GDP) was picking up somewhat from the previous quarter. Consumer price inflation was still running below the Committee’s longer-run objective of 2 percent, restrained in part by decreases in both consumer energy prices and the prices of non-energy imports. Survey-based measures of longer-run inflation expectations were little changed, on balance, in recent months, while market-based measures of inflation compensation remained low.

Unfortunately, many investors and economists still try to tie the Beige Book to the FOMC Minutes and other Federal Reserve reports. They have huge overlaps, but they are truly different reports and they cover different time periods.

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