YOUNGSTOWN, Ohio – From inflation to the effects of tariffs on the local economy, business owners want real-time information to make informed decisions.
The Federal Reserve Bank of Cleveland gathers information from additional business owners to provide the most accurate picture for them.
Those interested in what businesses are seeing in the regional economy can get information from the newly released Survey of Regional Conditions and Expectations (SORCE) indexes and the Beige Book summaries, the latter of which has more than 50 years of trends.
The SORCE indexes are a collection of information gathered as the Federal Reserve Bank of Cleveland reaches out to businesses in the fourth district, which includes all of Ohio, western Pennsylvania, Eastern Kentucky and the panhandle of West Virginia. SORCE data will now be available from 2014, although it was not released until recently.
“Our main function is to conduct outreach with businesses and community organizations, really to gain insights into our economic conditions across the fourth district,” Stephan Whitaker, senior policy economist at the Federal Reserve Bank of Cleveland, said during a FedTalk discussion last week.
Not only does the information collected come from surveys conducted eight times a year, but also from conversations and anecdotal data collected during meetings with the region’s nine Business Advisory Councils and through the board of directors.
The Business Advisory Council members include not just businesses, but also labor organizations, economic development organizations and chambers, Whitaker said. And the Fed’s board of directors includes not only the nine-member board in Cleveland, but also branch boards in Pittsburgh and Cincinnati.
Though some quantitative data can lag, Whitaker said conversations and data collected through surveys help the Fed see more recent emergent trends in the fourth district, which can vary from what is being seen in other parts of the country.
The data from the SORCE surveys are used to write the Beige Book summary. About 250 people respond to the surveys, which take about seven minutes to complete.
“The survey is designed to measure directional change,” said Brooke Dirtzu, economic analyst of the Cleveland Fed. “It’s not designed to measure magnitude of that change or get exact details about that change.”
For instance, the survey may find many businesses are increasing prices, an indication of inflation, but it will not say how much the inflation percentage rate currently is.
Dirtzu said the surveys focus on cyclical businesses and those with sensitive interest rates, such as manufacturing, which represents the largest share of respondents, and construction. Others are involved in business services, retail, real estate, banking and other industries such as education, health care, transportation and agriculture. A few are in the energy sector.
With the largest share of respondents in Cleveland, Columbus and Cincinnati, Dirtzu said the Cleveland Fed is always seeking additional participants.
The larger the sample size, the more accurate it would be. And the Fed hopes to add more rural and suburban business owners to those who regularly participate in the survey.
“Respondents are asked to report on nine core questions, a set of industry specific questions and a set of special questions that are based on policy priorities of that cycle,” Dirtzu said. “The nine core questions ask about business conditions, employment, nonlabor cost, wages, prices and planned expenditures.”
Dirtzu said the questions are asked in the form of a five-point scale and are often meant to measure expectations instead of current conditions. Then there are open-ended questions to answer. The answers are used to write the summary for the Beige Book.
Jayme Gerring, another research analyst with the Cleveland Fed, said the survey takes into account expected seasonal expectations. A graphing tool helps those looking at the information to better visualize it and compare one index to another.
Gerring said business owners can use the information to verify that perhaps what they are seeing is common or uncommon among other business owners in the region.
To look at SORCE data and how it is obtained or to participate, click HERE.