How Skyscrapers and Incomes Go Up Together

Comparing countries, China tops the world with its skyscrapers:

As for cities, New York, with 319 skyscrapers, is a distant third behind Hong Kong and Shenzhen:

Where are we going? To skyscrapers and incomes.

New York’s Tilting Skyscraper

At 1 Seaport, condominium buyers were happy to spend upwards of $30 million for a home in New York’s financial district. Reflecting economic optimism, its all-glass 60 stories were the perfect success symbol.

But not necessarily.

They soon discovered that misaligned slab edges on the building’s north side created a 3-inch tilt. But the real reason for the slanting structure could have been the decision to firm up the ground with concrete injections–a cheaper but riskier procedure for a foundation on infill and marshland. Consequently, during 2020, the developers halted construction. Still today, 1 Seaport is unfinished. unoccupied, and leaning.

My arrow points to 1 Seaport:

Like 1 Seaport, a skyscraper can represent more than a place to live or work. Some say it sends an economic message.

A Skyscraper Index

In 1999, an economist at Barclay’s Bank suggested a correlation between extravagant tall building projects and a “soon-to-dip” peak in economic prosperity. Composed of a list of projects that preceded recessions, the Skyscraper Index includes NYC’s 1908 Singer Building and the 1930 Chrysler Building. Meanwhile, we had the Sears Tower in 1974 and Kuala Lumpur’s Petronas Tower during 1997. In addition, the building of Taipei 101 spanned 1999-2004 and the UAE’s Burj Khalifa was 2010.

Each date marked the reversal of prosperity.

Still, economists suggest that the Index cherry picks the correlation. They conclude, somewhat less cleverly but probably more accurately, that super tall projects do not signal an imminent economic downturn. Instead, they merely reflect a response to affluence. They display an inflated view of what is possible and the dominance of ego over reason.

Our Bottom Line: Skyscrapers and Incomes

Asking how the skyscraper relates to economic activity, three economists from Rutgers University have an answer. With data proving that skyscraper projects do not indicate a turning point in the business cycle, instead they show the correlation to per capita real GDP. Marching upward together, when per capita real GDP goes up, so too will skyscrapers.

As a result, skyscrapers can provide clues about the business cycle. Composed of a trough, an expansion, a peak, and a contraction, the four stages of the business cycle have different characteristics. The skyscraper can be tangible evidence of a growing GDP.

My sources and more: Thanks to Sherwood for reminding me it was time to return to skyscrapers. Then, in addition to this 99 percent Invisible article and podcast, I recommend the New Yorker article with the leaning tower story. But most crucial for today’s analysis, this paper clearly and persuasively conveyed the connection between per capita GDP and skyscraper projects. And finally, to see what is being built, arch daily has images of the world’s 25 tallest buildings under construction–and most are in China.

Please note that several of today’s sentences were in a past econlife post.