How Pieces of the Economy Fit Together
(Catherine Mann recorded this Women in Economics Podcast episode in April 2021, shortly before leaving her position as global chief economist at Citibank. She joined the Monetary Policy Committee of the Bank of England on Sept. 1, 2021.)
Seeing how the smaller parts of the picture come together to form the global economy jumpstarted Catherine Mann’s interest in the field.
“How do companies work in the global economy? How do workers work in the global economy? How do policy makers interact with the global economy? It’s all about what kinds of data help me understand those pieces and how they work together,” she said. “It’s always a puzzle; the pieces fit together.”
Mann discussed her career path during a Women in Economics Podcast episode recorded in April 2021.
That journey started as a data collector for a company called Data Resources while Mann was in high school.
“I started copying numbers out of big books, historical numbers for housing prices in the library,” she said. “I started working with them when I was in high school because I used to babysit for the vice president and then graduated me from babysitting to being data entry.”
Later in her career, after studying economics at Harvard and earning a Ph.D. at the Massachusetts Institute of Technology, Mann spent time with the Federal Reserve Board of Governors. She started as an economist focusing on international economics. Mann said her work, and that of the international finance division, examined the critical role that global forces can play in monetary policy decision-making.
I looked at the “interaction of prices and to profit margins of companies and how that affected inflation,” she stated. “I was already sort of doing macro/micro because at the time we didn’t have firm-level data back then, but we had sector-level data—and so I was able to put together, sort of, how sectors and profit margins of sectors would get translated into import prices, into domestic inflation.”
Also in the podcast episode, Mann talked about her other career stops and the importance of mentorship, including her relationship with Janet Yellen, the first woman to serve as the U.S. secretary of treasury and chair of the Federal Reserve.
Jenn Beatty: Hello, I’m Jenn Beatty and you’re listening to the Women in Economics Podcast Series from the Federal Reserve Bank of St. Louis. Today, I’m speaking with Catherine Mann, who is the Global Chief Economist at Citibank. Welcome and thank you for joining us today.
Catherine Mann: Thanks very much. I really enjoy being with you.
Beatty: So I’m interested to hear what does the day in the life of a global chief economist look like?
Mann: Well, there’s a lot of variation in what I do in a day, although it’s punctuated in a cycle around flagship production of our global economic forecasts done monthly, and so about three days or four days before that I start thinking about what we have to do in order to put together the forecast. Our country economists around the world are looking at their own country’s data, evaluating the major macroeconomic aggregates, talking about them, but they have to put, sort of, pen to paper or spreadsheet about what they’re going to do for their monthly forecast. We have to add them up in certain aggregates so as to evaluate where we are with regard to global economic prospects, GDP, inflation, but increasingly, of course, what we care about is what’s below the top line in terms of sectoral growth, consumption investment, trade, employment, and then external balances and increasingly internal imbalances, fiscal imbalance as well so that the policy metrics.
So running up to the forecast I have pretty much intensive look at what the numbers look like. I have in mind a theme, but all that has to be gelled together pretty quickly, maximum five days over a weekend. So that’s kind of this monthly frequency.
Of course, there are other frequencies of the work that we do. We do a lot of work focused on global questions. Could be about progress of global inflation. It could be about what do we know about the nature of unemployment, the policies being used in the COVID environment, for example, to retain workers and jobs to their companies, or not, depending on which country we’re talking about. Another example might be what do we know about how monetary policy is impacting financial markets, asset prices, and how does that translate into economic performance so all that thematic work, big questions work, that is done by my various staff. They look at these questions and they formulate research, underpinnings, they have to write it up, and my job is both to guide them to those questions as well as to help them with the methodology. And then in the final analysis look at their work and to give guidance on how to write it up in final, you know, in final go-ahead to publication. So there’s that that is in on going, research portfolio.
Then the third element that is part of my day, and again, depends on the day, depends on where we are in the week, is every week we have a one-pager: one page, four charts that summarizes how the economics and the asset markets integrate in the research that we see being done throughout the Citibank platform. In other words, economics is an integral function, but it’s not the end product of an organization like Citi. So the end product, of course, is financial products, trade suggestions, underpinnings to investment banking; that’s the end product. Economics feeds into that and so on a weekly basis we look at what is going on in this week where we see this integration working well between the economic thought process and the financial market products that are coming out of the research function at Citi. So this is an important way of ensuring that economics is tied into the fundamental product of the financial institution. So that’s done on a weekly basis. It also makes sure that we are keeping in touch with what’s going on in the organization.
And then, finally, of course, I do a lot of media, Bloomberg, CNBC, that’s external; I’ll do conferences, both academic, policy, might meet with the Fed, might meet with the chief economists at the BIS, the chief economists at world economic forum, European Investment bank, product conferences, manage finance association, semi-conductor industry association, real range, real range of conferences. And then internally briefings with Jane Fraser, before that Mike Corbat, with the CEO, with Mark Mason, who is the CFO and then risk, the risk side of the bank as well. So a real range of activities.
Beatty: Yeah, an interesting mix of very high-level, 10,000-foot level and then very, almost, micro-oriented in doing the forecast. The grind to the forecast and also being able to kind of meet with, really, policy leaders around the world. very interesting job for someone who studied economics.
So I wanted to just get back to the basics and, you know, you studied economics at Harvard and then you went on to get your Ph.D. in international economics at MIT. So I’m interested to know what attracted you to economics at the outset and why did you stay, and then, how did these studies at these very prominent institutions prepare you for the career that was to come?
Mann: So I go back with economics a really, really long way. And I’ll tell you the story of that, but in the end the thing that has kept me in economics is ultimately using data to understand how the machine works. In other words, the machine is the global economy. The machine is how do companies work in the global economy. How do workers work in the global economy? How do policy makers interact with the global economy? It’s all about what kinds of data help me understand those pieces and how they work together. It’s always a puzzle; the pieces fit together. And I think data is the essential ingredient for understanding how those piece together and how the way they interact evolves over time. It’s not a static structure. It’s not a static set of relationships, and so the data is critical for helping us understand how these various economic actors, if you want to call them that -- firms, workers, policy makers -- how they interact with each other to end up with the economic outcomes that we see reflected in the markets, market valuations, the way we see it reflected in average wages, unemployment, inflation, and so forth and so on.
What really hooked me on the data was actually I started working on data collection for an organization that, at the time, was called Data Resources. I started when I was in high school and I started copying numbers out of big books, historical numbers for housing prices in the library, Baker Library at Harvard. I went down to the basement and Data Resources, as I say, I started working with them when I was in high school because I used to babysit for the vice president and then graduated me from babysitting to being data entry. And Data Resources, of course, has gone through several different mergers and acquisitions and so forth. It’s now IHS Markit and I think it now has actually evolved once again to be associated with S&P. So it started as a small company and now it’s, of course, a very big one. That’s where I started in doing data entry and that’s how I worked with them all the way through college and then went onto doing other things for a little while before going to graduate school.
Beatty: Wow. That is the most exciting story I’ve heard of someone describing themselves as a data junkie so that’s really impressive. So early in your career you also spent some time at the Federal Reserve Board of Governors in D.C. You started out there as an economist and you ended your career there as the assistant director in the international finance division. I’m really interested to hear more about your experiences at the Fed overall.
Mann: So as my first job coming out of graduate school, it’s international economics and some people would have what role does international economics play for monetary policy of the United states? It’s closed economy, what’s the big deal? And the international finance division was showing the critical role that global forces could play in monetary policy decision-making. It was headed up by Ted Truman at the time -- deeply, deeply passionate about international economics, its role in not just policy-making, but in the outcome of policy making for people. And to work with somebody who has that much passion for the subject matter is really, I think it’s really important to be passionate about what you do.
My first job there -- was to take what I had done in graduate school as my thesis dissertation, which was the interaction of prices and to profit margins of companies and how that affected inflation. I was already sort of doing macro/micro because at the time we didn’t have firm level data back then, but we had sector-level data -- and so I was able to put together, sort of, how sectors and profit margins of sectors would get translated into import prices, into domestic inflation. And so that relationship between how do companies set their prices, how is it affected by global competition, how does that impact domestic inflation and then, of course, once you get to talking about domestic inflation you immediately have a hook into the Federal Reserve Board’s decision and the FOMC’s decision about monetary policy. So it was an easy direction for me to take what I was doing in my dissertation into monetary policy decision-making. But, again, it was facilitated by having a very central person at the Fed, Ted Truman, playing a very important role.
This is a profession that there are not a lot of women in so I would have to say that my key mentors in graduate school, Paul Krugman and Rudy Dornbusch, very important, and then, of course, Ted Truman at the Fed. But I have to tell you that mentors and how mentors matter can have very long legacy, very long duration. And so let me give you the two examples. Undergraduate at Harvard I took economics and my two professors in my freshman year, one of them in macro, Janet Yellen.
Beatty: Oh, interesting, yeah.
Mann: And Janet, of course, now having crossed paths with Janet many, many times at the Federal Reserve Board, when I was working at the OACD and being the G20 finance deputy in the context of the G20 so many, many, interactions with Janet Yellen over the years. So, formative, but also over the years. one of the other people, my professors as freshman at Harvard, Rachel McCulloch. Now Rachel McCulloch, unfortunately, has passed but she also at peak critical junctures made differences in my career. The specific one being that she was a long-time professor after she left Harvard -- didn’t get tenured, neither of them did, by the way. She was --
Beatty: I think they ended up okay, though, yes.
Mann: Yeah, they both ended up okay. Janet, of course, Janet being Treasury -- having the policy trifecta, right, head of the Council of Economic Advisers, head of the Federal Reserve, head of the U.S. Treasury, that’s definitely a policy trifecta.
But Rachel McCulloch stayed as an academic. She became a professor at Brandeis University, and she was instrumental in having me come to Brandeis University as one of my career moves as came in as a Rosenberg Professor of Global Finance. So my point being that mentors can be men and women, they can play different roles at different points in your career, but that mentors can last a very long time and you may not even know that they are mentors at one point in your life, but they can play a very important role as your career develops.
Beatty: Those are really interesting stories, especially how someone can come into your career early in your life and then later on, you know, maybe have a larger impact, but you wouldn’t have been able to figure that out at the start of the relationship. So very cool story.
Beatty: So you mentioned working at Brandeis University, you were a professor of international economics and finance there. You also were an economist in the Bush administration’s Council of Economic Advisers. You served as policy advisors to many organizations such as the World Bank and the Peterson Institute. Can you talk a little bit about these different career paths, one, being academia, the other being work in the public sector, and how this influenced you or how those listening might find themselves in those careers?
Mann: So I have had a foot in lots of different places: the policy environment, the academic and think-tank environment, and, of course, now in the private sector. My lens has always been my international economy. That’s my core way of viewing the world, viewing data, viewing the actors in the world and how they interact with each other, but, of course, the audience and what they care about and how you need to communicate with them differs a lot and so by having these different audiences, whether it be Capitol Hill, whether it be students in a classroom, whether it be around a board table -- private or public sector board table, Federal Reserve Board or corporate board table -- people ask you different questions because they come with different perspectives. By being in all of these different places you are gathering a lot of richness about how different audiences view the world and that always brings important ways that I should be viewing the world too. That creates a lot more granularity in my mosaic picture of the world and I have become a much better economist because I have been exposed to a lot of different perspectives. Also I have become a much better communicator because these different audiences have different ways that they communicate with each other and they have different, you know, how long they’re willing to pay attention and what vocabulary is most important, what type of communication, visual, short memo, oral, so that multiple learner approach to things. Again, by having been exposed to different audiences, I have become a much better researcher and a much better communicator.
Beatty: One question you touched on now working in the private sector and, you know, you’re a prominent female economist that is featured regularly on Bloomberg, CNBC, you’re working in the midst of Wall Street for an investment bank, it still strikes me as rather a tough environment for women even today. So I just wanted you to reflect on that experience and how this career path in the private sector might be different than academia or public sector role.
Mann: So of the three areas I do have to say finance is the toughest in terms of percentages of women, you know, economics, as they say, has been about 30% at the undergraduate level and Ph.D. level for my entire career, and, I mean, I’m going back a long way. And, of course, that’s concerning because the questions that economists care about really are fundamental to everyone’s livelihoods. So it becomes distressing when women aren’t joining the profession and, of course, there’s ongoing concerns and considerations about why. Really, the voices have become much louder. I think that more progress is being made, actually, in the last five years than for any time previous to that.
But of the three places, I would have to say that women are even less well represented in the private financial profession. I think part of the reason is that finance is very much a client facing. Going back to you know, simple in supply and demand is there certainly is a greater appreciation within institutions about the diversity or the lack of diversity. Citi, for example, has quite a bit of focus on, and transparency, about what their numbers look like and a real push to come up with better outcome. But that’s the supply. You also have to have on the client side a demand. And there is, I think, a bit of a disconnect that you can have much more focus and, like, internal to the organization we really have to get these multiple perspectives out there on the table and into discussion with regard to the way we analyze financial portfolios, but you also have to have the clients demanding it. Certainly in some branches of the financial sector the clients continue to demand people who look like them and most of them are not women or minority. So you have a supply and demand problem. Everything can be reduced to that, I suppose.
Beatty: Yeah, interesting. That is a very insightful comment. And so my question to you is, how does the industry, how do you personally, how does this crop of women who have made it to the highest echelon in economics, how do they really inspire and encourage women and underrepresented minorities to study economics, to pursue it in a career that can be challenging and can, be a great personal cost to them in terms of time and advancement and, why is it important to do so? How do you switch the minds of the clients so that they demand having a diverse viewpoint at the table?
Mann: Right. So I think there are a couple of different things that I do and that other people do as well. So the first is getting people younger to be conscious of what it is that we do, right? So, you know, I do go to high schools and talk about, gee, what I do is really fun. I really like what I do and these questions are interesting and is it all clear sailing? No, but, there’s no clear sailing in any job, I would think. Challenges are good, and the learning curve is steep enough is a good thing. So at the youngest level, the younger people, it’s about what questions you care about and I think most people do care about these kinds of questions. So, again, communication about how exciting it is, how you can really ask interesting questions. I think data analysis, I think that’s a very important ingredient. So high school, college, and so forth.
More granular is think tanks, headhunters, and others, conference organizers are going to always be asking, because they kind of got the clue. It’s, like, we need to have diversity on a panel. We need to have diversity among our assistant professors. We need to have diversity in our teams that are working on client engagement. And they’re going to come to me or to other women: Can you give me any recommendations? And so, you know, get out the Rolodex because you know that people are going to come asking and you know that they are good candidates. And, frankly, that is how Rachel McCulloch got me to Brandeis, and with Brandeis, they had 50% senior women faculty in the economics department. Very different, and it was because of Rachel having the Rolodex: And so that is something that each one of us, especially the further up you go, the greater the responsibility too, to say, not only I have somebody, but looking at a panel, you know, I can give you some names. Even if you don’t ask, it’s, like, you go look at a panel you say, let me give you some names so that we can have a diverse panel. So sometimes they’re not going to demand. Sometimes you say, “You know, it would be a good idea if you had more diversity in this team.”
Beatty: Yeah, that’s awesome. Taking your expertise in economics for a minute and applying it to today’s health crisis and the pandemic and how it’s impacted the overall global economy, but really certain sectors of the economy, and in particular females in the workforce and just wanted you to reflect on that and how policy makers or you think about how to unwind some of the worst effects of the pandemic in the coming years.
Mann: One thing that the pandemic has exposed is just how fragile and, actually more like Swiss cheese, the social safety net is in the United States. And how fragile and Swiss cheese-like is support for women in the labor force and women at work. And the second thing being how fragile and Swiss cheese is jobs for those at the low end of the wage structure. So these two aspects of fragility, women’s fragile sort of cobbling together of, you know, child care or school care or elder care or house care, whatever, that fragility has really been exposed by COVID, but also, the fragility of the work environment for people who are at the low end of the wage structure.
This is not a revelation that women cobble together all sorts of things to try to get to work. We’ve known how fragile and challenging it’s been to be at the low end of the wage structure. These are not new revelations, but COVID really has exposed those, cracked those fragilities, and women in the labor force have not recovered. People at the low end of the labor market have not recovered. So this really just stark exposure of these challenges is what President Biden’s plans are trying to address. I don’t know whether they will be able to do that or not, but fundamentally if you want to improve the relationship between women and the labor force and women in the work force, then you have to do something about the multiple demands and the sort of cobbling together of supports and, you know, this is critical.
And then for the low end of the labor market, we’ve talked a lot about making work pay. Minimum wages at the federal level where they are, you know, you can’t live on that. It’s below the poverty line. Anda lot of states have already, of course, changed their minimum wage legislation, but there hasn’t been enough change at the federal. So those two aspects of the situation and, of course, at the low end of the labor market, low end of the wage market, that is tends to be more women, people of color. So coming up with the exposure of something that we already knew, but didn’t really kind of want to deal with, I hope that the stark exposure of this will make for the kinds of policy changes that are necessary to support not just women coming back to the work force, but women coming back to the workforce in a more stable way and people at the low end of the labor market, disproportionality women and people of color, coming back in a way that they can actually make work pay, that they can live, they have a living wage.
Beatty: Catherine, thank you so much for spending time with us today and telling your story and sharing your wisdom and expertise in economics. I really appreciate it.
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