NPR's Planet Money reported today on the US Federal Reserve's latest release of the Summary of Commentary on Current Economic Conditions, an anecdotal report on the economy known as the "Beige Book" published eight times a year. Beer was mentioned as one illustration of how oddly the economy works when in 2007 or so it was noted that certain beer stores in home construction areas were reporting sales were sluggish, a first sign of the impending recession. Which led me to wonder what else the nerds in suits that are the Fed have said about beer over the years. Here are some examples.
Manufacturing activity expanded. A survey of purchasing managers by Creighton University (Omaha, Neb.) found that manufacturing activity in Minnesota and the Dakotas increased in March. A manufacturer based in northwestern Wisconsin announced plans to build a production plant. A mill in Minnesota will begin a $170 million conversion from producing pulp for paper mills to producing cellulose for textiles. A brewery in Minnesota is expanding its operations. In contrast, a manufacturer of recreational vehicles in South Dakota has halted production and may not reopen: "Summary of Commentary on Current Economic Conditions," April 2, 2012.
A commercial banker in Virginia noted that borrowing by municipalities and institutions of higher education was relatively strong, but she added that demand from private sector firms had flagged. Another banker reported generally weak activity among his private sector clients, except, interestingly enough, beer and wine retailers. "People drink more in a bad economy," he surmised: "Beige Book," Richmond District, January 15, 2003.
...one banker with the region’s largest beer distributor as a customer noted that in times of serious economic problems, beer drinkers typically move down the food chain from expensive imports like Heineken to Bud or even Genesee... In that regard, he reported that cases of Heinekens still fly off the distributors’ shelves: "Meeting of the Federal Open Market Committee," May 15, 2001.
Sales of existing homes were reported to be off slightly from last year's levels but, again, still strong. One large realtor, noting that his company's sales were down about 10% from this time last year, stated "I certainly don't see my salespeople sitting around crying in their beers." Builders and suppliers reported that the commercial segment of the market, most notably suburban industrial construction, remained very strong in April: "Summary of Commentary on Current Economic Conditions," May 7, 1997.
Plant Closings. Various District manufacturers have announced further plant shutdowns, some temporary, others permanent. A diversified firm will permanently close a construction equipment plant in Iowa. A meat packer will close two pork processing facilities in Iowa. A producer of large farm tractors is shifting operations to Europe from Michigan. A large Detroit brewery, dating to the nineteenth century, is to be closed. Reasons for plant closings include excess capacity, severe competition, the high value of the dollar, and antiquated, high-cost facilities: "Summary of Commentary on Current Economic Conditions," March 1985.
CHAIRMAN GREENSPAN. Governor Ferguson.
MR. FERGUSON. First I want to respond briefly to Jerry Jordan and support what Don said. If it’s only a question of a few beers and pretzels, then I’d be supportive of looking at both sides of the balance sheet. If it involves anything more than that, I would suggest that we stay focused at this stage only on the one side of it: "Meeting of the Federal Open Market Committee," January 30-31, 2001.
I like that last one, Greenspan and the lads yukking it up about how many beers it would take for them to start agreeing with one or another. But besides offering transcripts of bankers daydreaming out loud about favourite past drunken episodes - you know, between decision making as they rule the world's money - the Fed appears to include brewing and beer as a fundamental economic experience. Which gives it some dignity, no? Some sense that someone is noticing the massive economic impact. Or maybe just the way beer grabs the attention, like this observation from one member from the same Greenspan meeting in 2001 suggests: "Marvin Goodfriend is certain that he can convince me over a couple of beers that this is a good idea, so I’ll probably take him up on that. I don’t know how many beers it will take!"
Oh. So, it's like that, then. Massively powerful economists and bankers talking beer like junior high boys talk about farts. Excellent.