September 18, 1997

Brother, Can You Spare a Dime for a Boom-Era Economist?

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Old School Inflation Fighter Resists Notion of a New Economic Era

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By ROBERT D. HERSHEY Jr.

EW ORLEANS -- The better the economy, the worse things seem to get for economists.

Fifteen years of expansion interrupted by just one brief downturn in the early 1990s has helped to erode the market for the people in U.S. corporations who study the economy for a living. "If your job is forecasting recessions, you've got a pretty sleepy job," said Paul Boltz, an economist at T. Rowe Price Associates in Baltimore.

That was just one reason that the annual meeting of the National Association for Business Economics, which concluded here Wednesday in this city known for celebrating good times, was such a sedate affair.

Sustained prosperity, corporate downsizing that has made research expendable and a backlash against the economic fraternity's inflated forecasting claims have combined to make the life of a business economist tougher than ever. Indeed, for a lot of economists these days, job insecurity is not an abstract principle but a day-to-day reality.

Much of the program at the meeting was given over to self-improvement panels on topics like "successful job switching," "hot career opportunities" and "how economists can play a role in their firm's decision making," and corridor talk often began with old friends telling of new jobs or the search for them.

Among the missing was Alison Lynn Reaser. A former economist at First Interstate Bancorporation in Los Angeles, she lost that job when First Interstate was taken over by Wells Fargo & Co. Then she landed at Barnett Banks in Florida but is now uncertain of what will happen after that company's acquisition by Nationsbank of Charlotte, N.C. Ms. Reaser had signed up to attend the meeting here but could not make it because of a freeze on travel by Barnett, a friend said.

"Hundreds of economists are in the same boat," said Ken Ackbarali, a Los Angeles consultant who also lost his job in the Wells Fargo takeover of First Interstate.

John H. Ortego was left behind in Albany, N.Y, when his one-time employer, Key Corp., moved to Cleveland. "I have joined the army of the self-employed," said Ortego, who just resigned his latest post as an economist at the Buffalo branch of the Federal Reserve Bank of New York.

Although banks and industrial companies have been trimming economics departments for years, the employment distress in this field has never been so acute. And the contrast with the 1980s -- which started with the worst recession of the post-World War II era and witnessed record federal budget deficits amid a booming stock market and the collapse of high inflation -- could not be more stark.

"We were in nirvana as economists in the early '80s," said Bernard M. Markstein, who set up a consulting business in Phoenixville, Pa., after losing a job at Meridian Bank just before it was taken over by Corestates Bank.

Now, cost-conscious senior management finds little use for predictions from in-house experts when a wide array of forecasts, none of them particularly more trustworthy than another, are readily available.

"Forecasting," Markstein acknowledged, "is not what we do best."

Not that they don't keep trying. The National Association for Business Economics consensus predicts that the economy will grow 2.3 percent next year. And slightly more than half of the respondents are forecasting a recession in 1999.

But even the experts do not put much stock in those predictions. "There was a lot of money to be made" in forecasting, especially of interest rates, said William Dunkelberg, an economics professor at Temple University and chief consultant to the National Federation of Independent Business. "Now we know we can't do that."

That explains why the association, which has seen membership decline 10 percent over the last decade, is searching for a new identity.

"We are less and less an association of traditional members doing macroeconomics forecasting in a corporate center economic unit," said C. Mark Dadd of AT&T, the current president of the association. To reflect the new reality, the group just changed its name from the National Association "of Business Economists" to the National Association "for Business Economics."

Its new mission is to help members apply their economic skills to specific corporate problems rather than make grand but dubious pronouncements about the entire economy.

This somewhat humbler ambition seemed especially striking when set against the opening address Monday by Jack Guynn, president of the Federal Reserve Bank of Atlanta, who declared the stellar performance of the economy to be a triumph of national economic policy making rather than favorable circumstances and improved corporate competitiveness.

"The conventional explanations," he said, "do not recognize the central role of the monetary policy the Fed has made over the past 17 years and the more recent contribution of improved fiscal policy."

At other sessions, one speaker after another concentrated on practical ways for economists to "add value," enhancing their careers by filling such specialty niches as litigation analysis and transfer pricing or adopting strategies for turning themselves into executives.

In the end, several economists noted, they are victims of the very market forces that the profession so often exults. And with the market changing, economists must change, too.