The uncertainty vexing world markets is driving up demand for economists-and changing their role within banks.
"This is a great time to be a bank economist," said Kenneth T. Mayland, KeyCorp's chief economist. Norwest Corp. chief economist Sung Won Sohn agreed, declaring, "The drought for economists is over now."
But the chief economist at a large bank, who asked to remain anonymous, said the increased visibility is a mixed blessing.
"When there are clouds building on the horizon, you don't know if it's a major storm or an afternoon shower," he said. "You can make a case for either future, and the bank would take very different paths."
In recent interviews, bank economists talked about how much tougher their jobs became in recent months as eastern Asia's economic problems spread, Russia devalued its currency, and the Federal Reserve began easing monetary policy.
Mr. Sohn, an unflappable economist with 25 years of experience, is clearly daunted by what lies ahead. "We could possibly be looking at a major earthquake in economics," he said. "We are facing the greatest economic challenge since the Great Depression."
For one thing, the focus of forecasting has shifted.
"In the past we've always said the United States is the center of the economic universe and the rest of the world follows," Mr. Sohn said. "Today it's really the other way around."
That means bank economists have to keep tabs on a broader set of data and have to do their jobs in new ways. Richard B. Berner, chief economist at Mellon Bank Corp., said the job is evolving into a more strategic position.
"We've had to get really involved in the business of managing the company," he said. "The experience of the last six months makes you think outside the box to consider a variety of possible scenarios. For example, we have to ask how things happening in 'X' part of the world affect us even if we're not there."
Other economists agreed.
"It's my duty, where I see contradictions developing, to let (the bank's senior managers) know what they could be blindsided by," said Comerica Inc.'s chief economist, David L. Littman.
Paul L. Kasriel, chief U.S. economist at Northern Trust Co., said he puts probabilities on various scenarios and tries to "alert people to the idea that this is an extremely volatile period and you don't want to make any big bets."
While making interest rate calls is still important, it is no longer the primary duty, economists said. "Forecasting has to take a back seat to identification of the risks to the economy that translate into risks to the bank," said Joel L. Naroff, chief bank economist at First Union Corp.
The job is also being affected by industry consolidation and cost- cutting. As banks merge, economics departments are being squeezed; the economists are under pressure to prove their value.
While the economists were reluctant to talk about job security, American Bankers Association chief economist James Chessen confirmed that many are worried about being fired.
"Life has been a little tricky for a lot of them because of all of these mergers. They have to perform and show value," he said, adding: "The probability of being wrong increases a lot in periods of uncertainty."
To a man, the economists professed to prefer making definitive forecasts. But most admitted the recent turmoil has led them to start most presentations with "on the one hand ... "
"I normally like being very specific, not holding back, giving a forecast and defending it," Mr. Naroff said. "But these days ... the risks are so much more evenly divided."
So what are chief economists predicting?
Most said economic growth would slow and interest rates continue to fall.
"I do believe the economy will see now an extended period of more sluggish growth. But I hasten to add, right now I don't see any prospect of recession," said KeyCorp's Mr. Mayland, who has been at this for 25 years. "I see a growth slowdown, not a turndown."
"I think we'll flirt with the notion that the economy is going to contract, but I don't think we'll get there," agreed Mellon's Mr. Berner.
Mr. Naroff is the most bearish of the bunch, saying, "A slowdown is clearly at hand, and a recession is not out of the question."