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Do Anecdotes Matter? Exploring the Beige Book through Textual Analysis from 1970 to 2025

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Abstract

We apply various natural language processing tools to see if the Beige Book is helpful in understanding economic activity. The Beige Book is a gathering of anecdotal compilations of current economic conditions from each Federal Reserve Bank, which is released to the public prior to FOMC meetings. We find that even controlling for lagged GDP growth and other metrics, the Beige Book sentiment provides meaningful explanatory power in nowcasting GDP growth and forecasting recessions, even more so than the yield spread or other news sentiment measures. The results on economic activity even hold in regional panel analysis. The Beige Book offers many more insights on the economy that can be gathered from even simple keyword tabulations. Topic modeling can also inform us about the different factors driving the narrative across particular periods of interest.

Suggested Citation

  • Shengwu Du & Flora Haberkorn & Isabel Kitschelt & Seung Jung Lee & Anderson Monken & Dylan Saez & Kelsey Shipman & Sandeep Thakur, 2026. "Do Anecdotes Matter? Exploring the Beige Book through Textual Analysis from 1970 to 2025," Finance and Economics Discussion Series 2026-004, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfe:102374
    DOI: 10.17016/FEDS.2026.004
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    1. Yunjong Eo & James Morley, 2023. "Does the Survey of Professional Forecasters Help Predict the Shape of Recessions in Real Time? ," CAMA Working Papers 2023-24, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    2. Eo, Yunjong & Morley, James, 2023. "Does the Survey of Professional Forecasters help predict the shape of recessions in real time?," Economics Letters, Elsevier, vol. 233(C).
    3. Charles S. Gascon & Devin Werner, 2022. "Does the Beige Book Reflect U.S. Employment and Inflation Trends?," Economic Synopses, Federal Reserve Bank of St. Louis, issue 13, pages 1-3, June.
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    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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