Skyscrapers Have Always Predicted Recession Through History

Investors look at everything from macro indicators like inflation, unemployment and GDP growth, to more bizarre ones like the diaper rash indicator and the hemline index to measure the health of the economy.  

 

Now, Barclays is out with its Skyscraper Index, which shows a correlation between construction of the next world's tallest building and an impending financial crisis. In fact the report even suggests that the rate of increase in height could also reflect the extent of that economic crisis. 

Drawing on Barclays' report we put together a timeline of the construction of skyscrapers and the financial crises that coincided with them.

The Long Depression, 1873 - 1878

Equitable Life Building

The pervasive U.S. economic recession with bank failures that came to be known as the Long Depression coincided with the construction of the Equitable Life Building in 1873. At the time the building was the first skyscraper at a height of 142 feet.

British banking crisis, 1890, and a world recession

New York World building aka Pulitzer Building

Chicago's 269-foot tall Auditorium building completed in 1889, and the 309-foot tall New York World building completed in 1890, coincided with the British banking crisis of 1890, and a world recession.

U.S. panic marked by the collapse of railroad overbuilding, 1893

Milwaukee City Hall

Chicago's 302-foot tall Masonic Temple, and the 348-feet tall Manhattan Life Building, and the 353-foot tall Milwaukee City Hall coincided with the US panic of 1893 marked by the collapse of railroad overbuilding. It also coincided with a string of bank failures and a run on gold.

First stock market crash on the NYSE, 1901

Philadelphia City Hall

The construction of the 391 feet tall Park Row Building presaged the US stock market crash and panic of 1901, as did the completion of Philadelphia City Hall, which stood at a height of 511 feet.

The Bankers' Panic and U.S. economic crisis, 1907 - 1910

Singer building, New York

The construction of New York's 612-foot tall Singer building, and the 700-foot tall Metropolitan life building corresponded with the panic of 1907. The Bankers' Panic was a financial crisis that occurred after the NYSE fell nearly 50% from its peak, and reflected a monetary expansion brought about by the establishment of trust companies.

The Great depression, 1929 - 1933

The construction of three record breaking buildings coincided with the onset of the Great Depression. 40 Wall Street which on completion in 1929 reached 927 feet, followed by the 1,046 foot tall Chrysler building in 1930, and the Empire State building in 1931, which towered over the others at 1,250 feet.

U.S. and worldwide economic crisis, 1973 - 1975

The 1972 construction of One World Trade Center, the 1973 completion of Two World Trade Center, and the 1974 construction of the Sears Tower in Chicago, coincided with a period of speculation in monetary expansion from foreign lending.
It also coincided with the collapse of the Bretton Woods system, a rise in oil prices that caused a global economic crisis, and speculation in stocks, property, ships and aircrafts.

Asian economic crisis, 1997 - 1998

The Asian economic crisis, currency devaluation and speculation in stock and property coincided with the completion of the Petronas Towers in 1997. At 1,483 feet, the Petronas Towers were the tallest buildings in the world and heralded a crisis in that region.

Dot-com bubble, 2000 - 2003

The construction of the 1,671 foot tall Taipei 101 began in 1999 and was completed in 2004. The duration coincided without the recession in the early 2000s and the tech bubble.

The Great Recession, 2007 - 2010

The 2010 completion of the tallest building in the world, the Burj Khalifa, which towers at 2,717 feet coincided with the current global financial crisis. The building surpassed Taipei 101's height on July 21, 2007.
Source: Barclays

China, ???

Of all of the world's skyscrapers under construction, China is home to 53% of them.

India, ???

India just finished building two skyscrapers and has 14 skyscrapers currently under construction.