What Is a Business Economist—Then and Now?

[Editor’s Note: This is the second in a series of articles planned in observance of NABE’s 50th Anniversary.]

When you Google the phrase “business economist,” nabe.com is high on the list of more than three million hits resulting from the search.  It’s a far cry from 50 years ago when NABE’s founders were striving to carve out the new profession of business economics and distinguish themselves from their academic counterparts.

Of course, the founders couldn’t have foreseen “googling” as part of their daily routine.  And most of them would not have expected the organization to expand its membership in the many sectors represented today.

In 1959, the year NABE began, the founders were corporate economists who wanted to pool their knowledge and share tools of the trade.   The officers and early members were concentrated in the manufacturing sector, the dominant player in the economy, with many working in banks.  Economists in government agencies were excluded in the early years.

Using NABE’s own growth pattern as a guide, it is clear that the definition of a business economist has expanded dramatically, especially in the last 20 years.  As service sector growth has eclipsed the shrinking goods-producing sector, so too has the organization’s membership grown more robustly in financial institutions and various consulting services. 

Today many NABE members employ economic tools without having the word “economist” in their job titles, observed Rosemary Marcuss and Carl Tannenbaum, both recent NABE presidents. 

A quick look at the Careers Page on nabe.com verifies the wide range of professional paths that comprise the work of a business economist.   There are economists working for major accounting and consulting firms, banks and other financial institutions, trade associations, economic development entities, and traditional corporate economists. And there are many entrepreneurs who have parlayed their corporate experience into services firms covering a variety of specialties.

Finding Identity, Sharing Skills

NABE’s founders were frustrated with what they perceived as a gap between what they were called upon to do within corporate headquarters and what they had been trained to do in academia.  Groups like the American Economic Association (AEA) “were not addressing what we thought were the relevant problems,” said George James, who served as the organization’s sixth president from 1964-65.  At the time he served as president, he worked for Battelle Memorial Institute, a research and development company in Columbus, Ohio, and later became chief economist for the Air Transport Association, the main lobbyist for major U.S. airlines.

“Our members were working for Ford, GM, Esso, and other big companies and we wanted to have a good exchange of what was happening with inventory levels and borrowing.  We wanted to be able to know about the economy in dollars and cents terms, so we could get a good feel of what was going on,” James said in a March 28 phone interview.  Until they organized NABE, these business economists felt they were at a loss for practical knowledge and a way to share resources.

Observing the evolution of a business economist’s role from inside DuPont, Charles Reeder, NABE president from 1966-67, said it was clear in the 1960s and 1970s that corporate economists took on a broader role within management.  “The view of management in general and finance officers was an internal view, whereas economists looked at the external.  We need to be looking out the window at the real economy, at business cycles, government policies, inflation, etc.,” he said in an April 2 phone interview.

Most big companies have significantly reduced their in-house staffs of economists over the last decade or more, Reeder acknowledged, in part because enhanced computer capabilities have resulted in productivity gains that have meant fewer employees, in many cases.

Transition After Forecasting Failures

Tannenbaum, NABE president in 2006-2007, observed that after the role of business economists expanded during the 1960s and 1970s, “a confluence of trends changed that. First, economic forecasters failed to anticipate the extreme conditions of the late 1970s and early 1980s.  It was therefore much harder for them to assert their value to an organization.”

“A second, and perhaps less well-documented contributor was the trend toward shareholder activism and takeovers.  The buyout craze that first gained steam thirty years ago led firms to be much more severe about headcount and expenses.  Buyout targets (and those who did not want to become buyout targets) took a hard look at economics functions and chose to pare them back or eliminate them altogether,” with the exception of financial institutions, Tannenbaum said.

Both Tannenbaum and Marcuss, who began her career in the private sector, pointed out that as many corporation trimmed their in-house staffs of economists, consulting firms grew and gained new contracts for work that had been done by company analysts.

“Fewer people have `economist’ in their titles today,” Marcuss said, adding that the roster of NABE members today includes many professionals in industries that were not around 50 years ago, particularly in the service sector.   As deputy director of the Bureau of Economic Analysis, she would not have been eligible for membership in NABE’s early year. She served as NABE president in 2004-2005.

In the last decade or so, economists at major federal data agencies have been among NABE’s most active members.  For example, Marcuss and others at BEA and their counterparts at the Census Bureau and the Bureau of Labor Statistics participate in the Professional Development Seminar (PDS), the policy conference and annual meeting, as well as NABE’s Statistics Committee. This reflects, in part, the importance of economic data to the practicing business economist.

In recognition of the broader range of professions using economics, NABE changed its name in 1997 from the original National Association of Business Economists to the National Association for Business Economics.

“We now have a mix of members who represent the old and new schools, if you will.  We are working hard to evolve so that we continue to be a leading provider of intelligence for each of these communities,” Tannenbaum said.