The business economist at work: marketing a specialty - regional economist at First National Bank of Chicago

Business Economics, April, 1995 by Diane Swonk

The position of regional economist at First Chicago evolved. In 1986, when I was given the original title, I was a junior economist and still new to the profession. I reported to several senior economists and had no managerial responsibilities. Today, I report to the Chief Economist, provide his primary backup, and advise senior managers (including the Chairman) directly. I manage a small staff of four, including economists, associates, and administrative assistants; edit our monthly publications; market that information to our customers; and monitor the forecasting functions of the department.

Over the past nine years, I have seen the benefits of becoming a commodity profession. Generalists are too often replaced by consultants. The regional economist position, however, was one of the few spared when the corporation moved to downsize in 1991. The optimist in me would like to believe that a clear link to corporate planning saved my position. An expertise on the region was integral to the bank's Midwest strategy. The cynic in me admits that the press was also important. The economists that were spared were those that were known.

In this article, I will examine the development of regional analysis at First Chicago, its links to corporate planning, and the role that the press played in determining those links. Like it or not, my opinions on the region would not have meant as much to our own senior management without the press that accompanied them.

THE ORIGINAL PLAN

In 1985, Jim Annable, the bank's Chief Economist, completed a planning exercise that included a set of industry winners and losers. The preliminary results suggested that heavy manufacturing was likely to come back, and with a strong presence in the "Rust Belt" First Chicago was well positioned to benefit from that turnaround. There was something to be gained from a Midwest strategy at a Chicago bank.

The challenge was to convince senior management. Simple trend analysis and the herd mentality of banking were against us. The coasts were still clearly the place to be. The bank was more interested in mimicking its counterparts in New York than in leveraging a regional advantage in Chicago.

In 1986, the position of regional economist was created to shape the bank's policy regarding the Midwest economy. I was given only two directives: (1) establish a mechanism for translating Jim's bet on industries into a forecast for the region; and (2) become the best-known regional economist in the nation. The bet was that a regional strategy would be taken more seriously with an established reputation in regional analysis to back us up. The task was daunting. I was twenty-three years old, freshly out of graduate school, and hardly a candidate to shift the course of bank policy. Credibility was an issue.

In 1986, I completed the initial stage of the analysis that supported our view that the Midwest was well positioned for a turnaround. I also created a set of models that linked our regional forecast to our data base on the national outlook. The link to the national forecast was an important one. Not only did it help us to deal with the consistency issue, but it made the leap to regional from national planning all that more natural. The regional analysis was simply an offshoot of the national analysis. I even kept my seat on the forecasting committee over this period, cultivating an expertise on autos and business fixed investment for the national forecast. (These were the two sectors that had a large effect on the course of the Midwest economy.)

By 1987, I was producing a quarterly translation of the national forecast for the region, publishing a regional publication, and beginning to build a reputation for regional analysis in the press. Still, the early years of my career were largely academic. The primary goal was to get the bank and myself up to speed on the Midwest economy. The secondary goal was to establish a reputation for that analysis in the press.

The leap to the press was a fairly easy one. As the largest bank in Chicago, First Chicago was expected to have some sort of working knowledge of the region. We were attracting a great deal of attention with relatively little effort. I have to admit, however, it was an uphill battle trying to convince the media that the "Rust Belt" would do better in the 1990s. Again, simple trend analysis (and a short memory) were going against us.

The sheer volume of our analysis was a plus. When all else fails, kill them with the facts, and the rationale was compelling. The dollar had depreciated, oil prices had collapsed, and the industrialized economies were in a period of synchronous recovery. Our producers were regaining market share and, by the late 1980s, the trade deficit was improving. Our forecast for a Midwest turnaround was quickly becoming a reality, and the press was beginning to bite.

That was all that we needed. The more that senior managers saw our argument in the media, the more that they believed it themselves. The painful truth is that it was the press (not the research) that provided me with the credibility that I needed to influence internal policy decisions.