Why the Fed's 'Beige Book' deserves your attention.

There's a boring-sounding government report coming out this afternoon that you should pay attention to anyway. It's called the "Beige Book," and in the tradition of Fedspeak, its colorless name conceals the fact that what's inside could have a big impact on your wallet. The Beige Book is a Federal Reserve report that comes out eight times a year. In it, business leaders and experts detail how things are going and how they see economic conditions from all corners of the U.S. economy—ranging from how much frozen fish costs in Boston-area grocery stores, for example, or whether computer software is in high demand in Cleveland. The report could also have implications for how well your retirement plan does, how much you'll pay on your credit card debt, how much interest your savings account will earn, or even whether or not you'll be laid off from your job. That's because the Fed is looking at the Beige Book—and any other economic data it can get its hands on—as it considers how much to raise interest rates the next time it meets later this month. If the Fed hears about prices falling or businesses struggling, it might convince policymakers to ease up on anti-inflation rate hikes. That could give stocks a boost, since businesses thrive on low interest rates, which make it easier to borrow money.
But if the report is full of talk of higher prices and booming business, the Fed might be more inclined to continue to raise interest rates at a fast and furious pace in hopes of slowing the economy down to contain today's raging inflation. That could send stocks down and borrowing costs up.
Case in point: how much you'll pay to take out a mortgage. The average rate for a 30-year mortgage jumped to 5.94% last week, nearing the recent peak it hit in mid-June, the Mortgage Bankers Association said today. The reason? Strong economic reports last week signaled that we might be in for another super-sized rate hike from the Fed.
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