The Beige Book tone score below which US recession odds rose sharply
From the secret Red Book to the Beige Book
The Beige Book is a report the Fed publishes about 2 weeks before every FOMC meeting. The Fed's 12 regional banks ask local businesses how things are going and write up what they hear. There are few numbers and no forecasts.
It started in 1970 as the secret Red Book. In 1983, it became public and got a beige cover.
The idea is simple. GDP data comes late. Businesses know what they are seeing right now. The Fed asks them before the official numbers arrive.
A January 2026 Fed paper tested every Beige Book since 1970 using FinBERT, an AI model that scores the tone. When the tone improves, GDP growth tends to be higher. Excluding COVID, the correlation was 0.43.
For the current quarter, a jump in tone from -0.5 to 0.5 was linked to 2.5 to 3.5 percentage points more GDP growth. For the next quarter, it added nothing once news sentiment and professional forecasts were included.
Where it gets interesting is recessions. The Beige Book performed better than the yield curve, news sentiment and professional forecasts at identifying recessions. Recession odds stayed near zero until the tone fell below -0.7, then rose sharply. By the end of 2025, those odds had risen somewhat.
The Beige Book won't tell you what the Fed will do. It tells you what the Fed is hearing from businesses, and that can give you an early insight on where the economy is heading.
Recession odds jump once the Beige Book turns gloomy
The odds of a US recession at each Beige Book tone score. Below -0.7, the odds climb fast.
Recession odds, per cent
The warning line
Tone along the bottom: lower is gloomier. It is usually below 0, because the Fed writes cautiously. Odds read off the paper's chart, so approximate.
Federal Reserve Board, FEDS 2026-004, Figure 4 · 1980 to 2019