# The skyscraper index - do skyscrapers predict economic downturns? **URL:** \ **Category:** Miscellaneous and Personal Stuff I Must Share\ **Created:** [August 21, 2013, 11:06pm UTC](https://boards.straightdope.com/t/the-skyscraper-index-do-skyscrapers-predict-economic-downturns/666833 "2013-08-21T23:06:08Z")\ **Posts on this page:** 9\ **Page:** 1
**Author:** ![deltasigma](https://avatars.discourse-cdn.com/v4/letter/d/e5b9ba/32.png) [@deltasigma](https://boards.straightdope.com/u/deltasigma)\ **Post date:** [August 21, 2013, 11:06pm UTC](https://boards.straightdope.com/t/the-skyscraper-index-do-skyscrapers-predict-economic-downturns/666833/1 "2013-08-21T23:06:08Z")
Correlation is not causation but still, it’s [an interesting study in coincidence](http://www.businessinsider.com/skyscrapers-that-predicted-financial-crises-2013-5?op=1). > [@](#): > > [Barclays’ Skyscraper Index](http://www.businessinsider.com/chart-of-the-day-the-skyscraper-index-2012-1)suggests that construction booms, especially those highlighted by record-breaking skyscrapers, coincide with the beginning of economic downturns. The index even suggests that the rate of increase in height could also reflect the extent of that economic crisis. Pics of all buildings at link ---
**Author:** ![Kent\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kent_clark/32/105_2.png) [@Kent\_Clark](https://boards.straightdope.com/u/Kent_Clark)\ **Post date:** [August 22, 2013, 12:42am UTC](https://boards.straightdope.com/t/the-skyscraper-index-do-skyscrapers-predict-economic-downturns/666833/2 "2013-08-22T00:42:05Z")
The first thing I noticed was the missing John Hancock Center in Chicago. When it was built in 1968 it was IIRC the second-tallest building in the world. But 1968 wasn’t the beginning of an economic downturn. They also skip over the Flatiron Building (1902) and overlook that construction on the Empire State Building didn’t begin until 1930 – _after_ the stock market crash. ---
**Author:** ![suranyi](https://avatars.discourse-cdn.com/v4/letter/s/e36b37/32.png) [@suranyi](https://boards.straightdope.com/u/suranyi)\ **Post date:** [August 22, 2013, 12:56am UTC](https://boards.straightdope.com/t/the-skyscraper-index-do-skyscrapers-predict-economic-downturns/666833/3 "2013-08-22T00:56:33Z")
I have the feeling there’s a lot of confirmation bias going on here. Skyscrapers have been continuously been built over long periods of New York’s history, for example. Surely the US wasn’t facing an economic downturn the whole time. ---
**Author:** ![deltasigma](https://avatars.discourse-cdn.com/v4/letter/d/e5b9ba/32.png) [@deltasigma](https://boards.straightdope.com/u/deltasigma)\ **Post date:** [August 22, 2013, 1:09am UTC](https://boards.straightdope.com/t/the-skyscraper-index-do-skyscrapers-predict-economic-downturns/666833/4 "2013-08-22T01:09:52Z")
If you go to the link in the quote they give a little more in the way of explanation > [@](#): > > Judging by the Skyscraper Index, investors may want to be wary of the construction boom in China and India. China is expected to complete about 65 of its 124 skyscrapers under construction over the next six years. Meanwhile, India is planning to complete 14 skyscrapers over the next five years, including the Tower of India, which would be the second tallest building in the world. > This is because the construction of skyscraper booms indicate a widespread misallocation of capital and eventually, an economic correction. But the real issue is, why do you want to confuse me with facts? 😉 ---
**Author:** ![LonghornDave](https://avatars.discourse-cdn.com/v4/letter/l/a87d85/32.png) [@LonghornDave](https://boards.straightdope.com/u/LonghornDave)\ **Post date:** [August 22, 2013, 7:32pm UTC](https://boards.straightdope.com/t/the-skyscraper-index-do-skyscrapers-predict-economic-downturns/666833/5 "2013-08-22T19:32:46Z")
I believe this. How about the 58 story building being constructed in Midland, Texas. Currently, the tallest building in Midland is 24 stories. Midland, for those that don’t know, is basically a mid sized Texas city (only 150,000 people or so) out in the middle of nowhere. ---
**Author:** ![Lumpy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lumpy/32/446_2.png) [@Lumpy](https://boards.straightdope.com/u/Lumpy)\ **Post date:** [August 22, 2013, 7:43pm UTC](https://boards.straightdope.com/t/the-skyscraper-index-do-skyscrapers-predict-economic-downturns/666833/6 "2013-08-22T19:43:18Z")
At least in the case of China, I could believe that an over-investment in a construction boom may eventually _cause_ a downturn. ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [August 22, 2013, 8:04pm UTC](https://boards.straightdope.com/t/the-skyscraper-index-do-skyscrapers-predict-economic-downturns/666833/7 "2013-08-22T20:04:06Z")
Those charts kind of miss the economic downturns in 1990 and 1980/1981, don’t they? ---
**Author:** ![dracoi](https://avatars.discourse-cdn.com/v4/letter/d/90db22/32.png) [@dracoi](https://boards.straightdope.com/u/dracoi)\ **Post date:** [August 22, 2013, 8:43pm UTC](https://boards.straightdope.com/t/the-skyscraper-index-do-skyscrapers-predict-economic-downturns/666833/8 "2013-08-22T20:43:31Z")
That article is a pretty bad representation of the so-called skyscraper index. To focus on just a couple of really tall buildings is a mistake. I can’t find it online, but I’ve seen another version of the skyscraper index that looks at overall numbers of tall buildings and you can see in that version that construction tends to follow the overall economic activity. Skyscrapers are only when you have the money to do so and you’re optimistic about getting it filled up - both of which are more often true during bubbles or the economic peaks. But skyscrapers take a long time to design and build, so the economic conditions have time to turn down before they’re finished. That version of the theory holds some water in that the correlation does exist. I’m not sure how good it is in a predictive sense though. You’d almost be just as correct say “When the economy is good, it’s likely to go down again.” ---
**Author:** ![deltasigma](https://avatars.discourse-cdn.com/v4/letter/d/e5b9ba/32.png) [@deltasigma](https://boards.straightdope.com/u/deltasigma)\ **Post date:** [August 22, 2013, 9:08pm UTC](https://boards.straightdope.com/t/the-skyscraper-index-do-skyscrapers-predict-economic-downturns/666833/9 "2013-08-22T21:08:11Z")
[Well, here is what the originator of the index had to say recently about it](http://edition.cnn.com/2013/08/05/business/china-sky-city-skyscraper-index): > [@](#): > > “The Skyscraper Index has a good 150-year correlation between the world’s tallest buildings and economic slowdowns and recessions,” says Andrew Lawrence, pioneer of the Skyscraper Index and head of Hong Kong and China property research at CIMB Group. “For China, there is no reason that correlation will change.” > > According to the Skyscraper Index, the opening of [every single “world’s tallest” building](http://www.cnn.com/2010/WORLD/asiapcf/01/08/skyscrapers.rise.markets.fall/index.html) in the past century has coincided with an economic downturn in that country. [More background on the index from 2008](http://www.asiasentinel.com/index.php?option=com_content&task=view&id=1575&Itemid=590) > [@](#): > > In December of 1999, as a whimsical exercise to entertain stockbrokers during the Christmas lull, a Hong Kong-based property analyst named Andrew Lawrence created the Skyscraper Index, which sought to correlate the periodic naming of the world’s tallest buildings with spectacular market crashes. > > That should sound familiar in November of 2008, with the planet’s bourses capsizing even as virtual thickets of gigantic buildings rise into the sky, many of them to be stopped halfway up or destined to remain without tenants into the future. In fact, of a list of the world’s tallest 20 buildings compiled by the website [about.com](http://about.com), 14 remain unfinished. > > The study by Lawrence, a director with what was then the British investment bank Dresdner Kleinwort Wasserstein, has been the subject of scholarly papers published in English, German and Czech as well as scores of newspaper articles.