Corporate economists are hot again

by on February 27, 2014 at 12:40 pm in Uncategorized | Permalink

Bob Tita reports:

With more data available than ever before and markets increasingly unpredictable, U.S. companies—from manufacturers to banks and pharmaceutical companies—are expanding their corporate economist staffs. The number of private-sector economists surged 57% to 8,680 in 2012 from 5,510 in 2009, according to the Bureau of Labor Statistics. In 2012, Wells Fargo & Co. had one economist in its corporate economics department. Now, it has six.

There is more here.

Edward Burke February 27, 2014 at 12:58 pm

Tyler: for non-economists such as yours truly, how well does an outfit like the Natl. Assn. for Business Economics perform, compared to the hosts of academic economists, econ journalists, and govt. economists? What particular expertise do business economists bring to their interpretation of economic data, what lends credence to their analysis and interpretation? –Whenever I hear a report from the NABE cited in various media, I generally hear not only relevant reporting of immediate circumstances, I seem to hear generally sound analysis free of mystifying theory and public policy advocacy.

RGB12 February 27, 2014 at 3:21 pm

good questions. most economists don’t produce anything useful to general society; almost none could even roughly predict the Great Recession economic calamity.

“Corporate Economists” are more fashion than function. The referenced WSJ article is really praising the practical, longstanding Market-Research business function, into which economists are apparently trying to branch. standard old market-researchers and even old-fashioned corporate marketers/salesmen are more cost-effective than the professional secular seers of economics.

spencer February 27, 2014 at 4:39 pm

I give the example from my first NABE meeting in the fall of 1974.

The consensus was for stagflation, about 2% real growth and 8% inflation in 1975.

Without exception, everyone I talked to in the halls or bars said they agreed with the consensus for the overall economy, but not for the industry they specialized in, where demand was falling off a cliff.

They all depended on the few major macro model for their economic forecast, but developed their own sources and models for the key businesses their firms .sold into or bought from.

So the NABE is no better than anyone else on the overall economy, but they offer much better analysis of individual industries. The problem is that they do not have a good way of bring all of
that individual members advantage to bear on the overall forecast.

I did write a memo reporting the conflict between what I heard in the halls and from the speakers
in the fall of 1974 that I’ve referred back to several times to make sure my memory is still right.
Remember, many think the 1974-75 deep recession was really two back to back recession with a rebound in the middle of 1974 between the two falls in output.

Sierra M Slettvet February 27, 2014 at 12:59 pm

I’d love to hear more about the role of a Corporate Economist & how it relates to business analysis roles.

prior_approval February 27, 2014 at 1:15 pm

And that brings to mind a classic quote from Ghostbusters – ‘You’ve never been out of college! You don’t know what it’s like out there! I’ve *worked* in the private sector. They expect *results*.’

msgkings February 27, 2014 at 1:58 pm

RIP Harold Ramis

Brian Donohue February 27, 2014 at 10:35 pm

+1

chuck martel February 27, 2014 at 2:26 pm

The Wells Fargo corporate economics department will soon know all about the marginal utility of increasing numbers of economists.

Albigensian February 27, 2014 at 3:11 pm

… IF they have some way to measure the utility of their economists!

prior_approval February 28, 2014 at 4:04 am

Name badges with sensors is the coming thing, I’ve read.

Not that anyone with tenure will ever being wearing one as a condition of continuing employment, of course.

Jeff February 27, 2014 at 3:09 pm

So next time I go to a bar I’ll tell her I’m in corporate economics and she’ll think I’m hot?

steve February 27, 2014 at 4:16 pm

No, but she will keep a wary eye out for your other hand.

Jeff February 28, 2014 at 8:57 am

Nicely played!

Weldon February 28, 2014 at 4:52 am

Huh. All that attention for a profession that still can’t seem to come up with consistently verifiable predictions about basic things like wages or prices? (Or even universally accepted definitions of key concepts like “money” or “labor”?)

I’m in semiconductors. I’d love in on that racket. (“Well, some people think a p-n junction will perform as a linear device, others as a square law device… What do you mean ‘Look at what they actually do’? What am I, a rock collector?”)

libert March 1, 2014 at 6:54 pm

+1. And somehow applied economics is still considered less rigorous than theory…

Diamante Capone March 2, 2014 at 6:13 am

But the question is: How a man, with a regular economics degree, be an economist?

the new modern figure job in the modern business economy?
a new trendy job?
(with this unemployment rate)

Bill Conerly March 2, 2014 at 4:20 pm

Having been a corporate economist, the best use of one is not for GDP or CPI forecasts, but to delve deeply into the company. When a company’s sales volume is off, the economist can diagnose whether it’s true for the whole industry or whether it’s specific to the company. If company-specific, the economist can determine whether it’s likely due to price or other factors. So cutting price is sometimes a good response, but sometimes not. I did some very valuable work looking at historic data and not forecasting at all.

I don’t see the recovery in traditional business economics, which the article emphasized, but economists are finding strong roles at the big tech companies, such as Google, Amazon and Facebook.

The biggest difference between corporate economics and academic work is diminishing marginal returns. In business, getting the big picture right, quickly, is important. In academic work, that’s just the beginning, to be followed by countless hours doing more sophisticated econometrics that don’t change the result.

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