Skyscraper Index

The Skyscraper Index is a whimsical concept put forward by Andrew Lawrence, a property analyst at Dresdner Kleinwort Wasserstein, in January 1999, 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 cannot be used to accurately predict recessions or other aspects of the business cycle, but that GDP can predict the height of building construction.

Lawrence started his paper, The Skyscraper Index: Faulty Towers, as a joke (emphasized by a title referencing a comedy show) and based his index on a comparison of historical data, primarily from the United States' experience. He dismissed overall construction and investment statistics, focusing only on record-breaking projects. The first notable example was the Panic of 1907. Two record-breaking skyscrapers, the Singer Building and the Metropolitan Life Insurance Company Tower, were launched in New York before the panic and completed in 1908 and 1909, respectively. Met Life remained the world's tallest building until 1913. Another string of supertall towers – 40 Wall Street, the Chrysler Building, the Empire State Building – was launched shortly before the Wall Street Crash of 1929.

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