Many cities have a “skyscraper” (tall building) added to the skyline, but experience a downturn in the economy. New York City’s Chrysler Building (1930) and Empire State Building (1931) were the tallest buildings in the world, but were planned just before the start of the Great Depression.
Andrew Lawrence, the research director for a German bank, developed the “Skyscraper Index” in 1999, showing a correlation of the world’s tallest buildings and economic downturns. The “Skyscraper Index” has also been called the “Skyscraper Curse” since at least 2005. In 2013, New York City’s One World Trade Center (replacing the World Trade Center that was destroyed by terrorist attacks on September 11, 2001) was declared to be the tallest building in the United States. Several 2013 news articles mentioned the “skyscraper curse.”
Wikipedia: Skyscraper Index
The Skyscraper Index is a concept put forward in January 1999 by Andrew Lawrence, research director at Dresdner Kleinwort Wasserstein, which showed that the world’s tallest buildings have risen on the eve of economic downturns. Business cycles and skyscraper construction correlate in such a way that investment in skyscrapers peaks when cyclical growth is exhausted and the economy is ready for recession. Mark Thornton’s Skyscraper Index Model successfully sent a signal of the Late-2000s financial crisis at the beginning of August 2007.
The buildings may actually be completed after the onset of the recession or later, when another business cycle pulls the economy up, or even cancelled. Unlike earlier instances of similar reasoning ("height is a barometer of boom"), Lawrence used skyscraper projects as a predictor of economic crisis, not boom.
Careful statistical study has found that the height of buildings can not be used to accurately predict recessions or other aspects of the business cycle, but that GDP can predict the height of building construction.
May 1, 1999
Skyscrapers may augur downturns Call it the skyscraper index. Andrew Lawrence of Dresdner Kleinwort Benson in Hong Kong has found an uncanny relationship between financial panics and the construction of the world’s tallest buildings.
Spring 2005, The Quarterly Review of Austrian Economics, pp. 51-74.
Skyscrapers and Business Cycles
("Skyscraper Index” is mentioned, but “Skyscraper Curse” is not used.—ed.)
August 29, 2005
In New York real estate, beware the skyscraper curse
Posted by Dominic Basulto
Fortune looks into the myth and reality of the skyscraper curse. If you believe in the curse, then it’s time to start packing your bags. After all, four media giants (the New York Times, Hearst, Bertelsmann and Bloomberg) are busy erecting huge new midtown skyscrapers in an orgy of vertical capitalism. If the past is any indication, it will all end badly:
Don’t believe it? Well, check out the “Skyscraper Index” created by Deutsche Bank research guru Andrew Lawrence. According to this index, the world’s tallest buildings have been constructed before the onslaught of major economic downturns.
The ‘Skyscraper Curse’ Is Worth Watching in 2007: William Pesek
Commentary by William Pesek - December 10, 2006 13:52 EST
Standing out amidst the tangle of skyscrapers is the 1,671-foot (509 meters) Taipei 101, which is currently the world’s tallest building. Its presence, coupled with a worsening political crisis that could trip up the economy, reminds one of the ``Skyscraper Curse.’’
A bizarre suggestion, perhaps, and certainly an unscientific one. Yet history shows an uncanny correlation between tallest building projects and financial crises. Be it in Kuala Lumpur in 1997, Chicago in 1974, New York in 1930 or the biblical Tower of Babel long ago, mankind’s penchant for architectural overreach is a strangely reliable omen of troubles.
A coincidence? Perhaps, yet economists such as Mark Thornton, senior fellow at the Ludwig von Mises Institute in Auburn, Alabama, argue that skyscrapers can speak volumes about a nation’s wealth, technological prowess, ambition and, perhaps most importantly, hubris.
The Skyscraper Curse Hits New York
By Mark Thornton
November 18, 2013
It is now official! New York City has won the title of having the nation’s tallest structure.
This dubious record should nonetheless be a warning to us that the “Skyscraper Curse,” the forerunner of economic crisis, is lurking near.
The Curse originated during the Panic of 1907. Two skyscrapers were under construction during this time, the Singer Building opened in 1908 and the Metropolitan Life Building opened in 1909, and each would become the world’s tallest. In 1929, America’s Great Depression was ushered in with the opening of the 40 Wall Street Building (currently the Trump Building), then came the Chrysler Building in 1930, and the Empire State Building in 1931. The booming 1960s was followed by the stagflation of the 1970s and saw more record-setting skyscrapers being built with inflated money, among them World Trade Towers 1 & 2 and the Sears Building which all opened in the early 1970s.
New York City • Buildings/Housing/Parks • Monday, November 18, 2013 • Permalink