Why is the Beige Book important? Many experts feel that this report gives the Fed a better read on the current economic conditions, which could give some hint as to what action the Central Bank will take when it meets next in early November. Judging by the tepid reaction on the Street, this report lent little credence to any belief that the Fed will take any noticeable action.
In fact, John Canally from LPL Financial said, "There is nothing in this report that would persuade them [the Fed] not to do more quantitative easing." Canally believes that the Beige Book needed to show signs of "re-acceleration" in key parts of the economy to stop the Fed from making a move.
Analysts and experts seem resigned to the fact that the Fed is going to buy as much as $500 billion in Treasuries over the next half year in order to bring down long-term interest rates. Taking this action could get investors and businesses to take more risks. More risks means the potential for more people spending money. Remember that a week ago Fed head Ben Bernanke said that growth in the next 18 months may not be enough to lower unemployment. I have long championed the fact that it is going to take real job growth to get us out of this recession (what some call the Great Recession), and to hear Bernanke say that it may take 18 months to see such growth is a bit disappointing.