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The Skyscraper Curse

• David (Viacheslav) Davidenko • Season 4

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Towering skyscrapers stand as monuments to human ambition and progress—but could they also be warning signs of economic disaster? The curious "Skyscraper Curse" suggests exactly that. 

When we examine history, a compelling pattern emerges: the Singer Building (1908) rose alongside the Panic of 1907, the Empire State Building opened during the Great Depression, the World Trade Center was completed amid 1970s stagflation, and the Burj Khalifa debuted following the 2008 financial crisis. This isn't supernatural prophecy but rather a fascinating economic indicator first documented by economist Andrew Lawrence in 1999.

The curse reveals two fundamental truths about economic cycles. First, skyscrapers typically begin construction during boom times when optimism and capital flow freely—only to be completed years later when conditions have deteriorated. Second, these architectural marvels often represent competitive one-upmanship between cities and nations, prioritizing prestige over practical economic decisions. The buildings become physical embodiments of the excessive confidence that preceded each crash.

How relevant is this pattern in today's world? With remote work revolutionizing office needs and digital infrastructure potentially replacing physical buildings as symbols of economic might, we may be witnessing the evolution of this historical pattern. Whether examining skyscrapers or future indicators, the relationship between human ambition and economic reality continues to fascinate. Subscribe now to join our ongoing exploration of unexpected connections between everyday phenomena and the economic forces shaping our world.

📰 Read more about this topic in our latest article:  https://sunrisecapitalgroup.com/the-skyscraper-curse-ambition-or-economic-alarm-bell/

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Speaker 1:

Ever come across like one of those ideas. That just sounds wrong, but it's also like super interesting.

Speaker 2:

Oh yeah, for sure.

Speaker 1:

Well, that's what we're looking at today, this whole idea of the skyscraper curse. You know, at first this sounds totally made up right, Like the idea that whenever we build these huge skyscrapers it's a sign that the economy is about to tank.

Speaker 2:

But then you start looking at the history and you can't help but wonder like what if there's actually something to this? Yeah, there's definitely a pattern there. It's kind of freaky when you see these buildings going up and then boom, everything crashes. It does make think.

Speaker 1:

Totally so. That's our mission today to figure out what's really going on with this weird connection between skyscrapers and the economy. Does this curse really hold up? Are there other explanations? We're going to look at some really crazy examples from history and try to understand the economics behind it all.

Speaker 2:

Yeah, and hopefully make it clear for our listeners. You know we want to give everyone a solid understanding of the whole skyscraper curse thing. You know all the details and different perspectives without getting too bogged down.

Speaker 1:

Exactly so. For everyone listening who wants to learn something new without getting a lecture, you're in the right place.

Speaker 2:

Absolutely. We're going to keep it fun and interesting, but also give you the facts.

Speaker 1:

All right, so let's start at the beginning. Where did this whole skyscraper curse idea even come from?

Speaker 2:

Well, it all goes back to 1999. There was this British economist named Andrew Lawrence.

Speaker 1:

OK, andrew Lawrence.

Speaker 2:

Okay, he noticed this kind of strange trend. He saw that whenever someone finished building the world's tallest building, it was often followed by a big economic downturn. Oh, wow, and he came up with this catchy name for it the Skyscraper Index.

Speaker 1:

The Skyscraper Index. Yeah, that's pretty clever. So this isn't some ancient myth or anything. It's actually a pretty recent idea based on, you know, modern history. Exactly myth or anything. It's actually a pretty recent idea based on, you know, modern history, exactly Okay, so let's get into some of the specific historical examples, because this is where it starts to get really interesting. Our sources mentioned a few really key cases. Let's start with the Singer Building in New York City.

Speaker 2:

All right. So the Singer Building was finished in 1908, and it was the world's tallest building at that time.

Speaker 1:

Huge accomplishment.

Speaker 2:

Oh yeah, definitely, but what's interesting is that it was finished right around the same time as the panic of 1907, a major financial crisis in the US.

Speaker 1:

So right at the peak.

Speaker 2:

Yeah, it's not like anyone's saying the building caused the panic, but it does seem to symbolize that kind of overconfident boom time right before things went south.

Speaker 1:

It's like the symbol of how much progress they'd made just before everything crashed Right Okay. So then there's the Empire State Building, maybe the most famous example of the skyscraper curse. What happened there?

Speaker 2:

Well, the Empire State Building was finished in 1931, in the middle of the Great Depression.

Speaker 1:

Oh, wow.

Speaker 2:

Talk about a contrast. Here's this incredible skyscraper, a symbol of ambition and progress, being built while the economy is completely falling apart.

Speaker 1:

It's kind of hard to wrap your head around that.

Speaker 2:

Yeah, yeah. Well, this unemployment business is failing people struggling to survive and then this huge skyscraper opens up. It really shows you how disconnected things can be.

Speaker 1:

Yeah, like a monument to a better time. That's gone. Ok, so let's fast forward a few decades, to the 1970s, and the World Trade Center again in New York City. So what do we see there?

Speaker 2:

So the World Trade Center, those iconic twin towers, were finished in 1973.

Speaker 1:

Okay.

Speaker 2:

And this was during a really tough time for the US economy. It was a period of what economists call stagflation.

Speaker 1:

Stagflation right.

Speaker 2:

Yeah, it means the economy wasn't growing, but prices were still going up.

Speaker 1:

Ooh, that's a bad combination.

Speaker 2:

It was not a good time.

Speaker 1:

And yet here you have these massive towers being built, another symbol of American power and progress, but again the reality of the economy was a lot different. It's like that same pattern again. Right, this big display of confidence and ambition, while things are actually pretty shaky underneath.

Speaker 2:

Yeah, you got it.

Speaker 1:

And then we get to a more recent example the Burj Khalifa in Dubai. This one's especially interesting because of when it was built.

Speaker 2:

Right. So the Burj Khalifa, the tallest building in the world, was finished in 2010, right after the 2008 financial crisis.

Speaker 1:

Talk about timing.

Speaker 2:

Right After everything that happened in 2008, with the global economy and Dubai's own debt problems, it was hard not to think about the skyscraper curse. It definitely made people nervous.

Speaker 1:

Yeah, you have to wonder if it was a coincidence or something more. So we've seen all these examples where skyscrapers are finished right before or during an economic downturn. It's pretty striking, but for our listeners out there it's important to remember we're not saying these buildings cause the problems right?

Speaker 2:

No, definitely not. It's more about correlation, not causation. It just seems like there's this tendency for these events to happen around the same time.

Speaker 1:

Exactly so. The question is why? Why might these peaks in skyscraper construction line up with economic peaks? What are some of the possible explanations?

Speaker 2:

Well, our sources point to a couple of key ideas. One is what you might call the boom mindset trap.

Speaker 1:

OK, the boom mindset trap. What is that?

Speaker 2:

So think about it. Building a record-breaking skyscraper takes a long time and a lot of money.

Speaker 1:

It's a massive undertaking.

Speaker 2:

Oh yeah, and you need people to believe that the economy is going to stay strong for a long time. You know, investors, developers, everyone needs to be confident that it's worth the investment, and those conditions are most likely to exist during an economic boom.

Speaker 1:

Right, when everyone's feeling good and thinking the good times will last forever.

Speaker 2:

Exactly, and that's when these projects get started. But here's the thing by the time the skyscraper is finally finished, which can be years later, the economy might have changed completely. That initial optimism might have led to too much investment and created bubbles that are about to burst.

Speaker 1:

It's like a delayed reaction, almost.

Speaker 2:

Yeah. And then the skyscraper, which was supposed to be a symbol of success, ends up representing this moment of misplaced confidence.

Speaker 1:

Wow, that's pretty deep, okay, so what's the other big idea our sources talk about?

Speaker 2:

The other one is what we could call competitive one-upmanship.

Speaker 1:

Okay, idea our sources talk about. The other one is what?

Speaker 2:

we could call competitive one-upmanship. Okay, competitive one-upmanship. So basically these super tall skyscrapers, they're not just about having office space, they become these symbols of a city's or even a country's ambition and wealth Like a way to show off. Yeah, kind of, and there's this natural tendency to want to have the tallest, the most impressive building. It becomes this global competition.

Speaker 1:

Oh, I see. So it's not really about the building itself, it's about what it represents.

Speaker 2:

Right, and this competition can lead to some problems. You know. Countries and cities might stretch their resources too thin or take on too much debt just to build these giant skyscrapers.

Speaker 1:

So it's like they're focused on winning the competition instead of making smart economic decisions.

Speaker 2:

Exactly. And the skyscraper becomes this symbol of that misplaced focus on prestige over practicality.

Speaker 1:

It's interesting that our sources also talk about how the skyscraper index compares to other unusual economic indicators.

Speaker 2:

Oh yeah, those are always fun to talk about.

Speaker 1:

So what are some of the other strange economic indicators that are out there?

Speaker 2:

Well, there's the lipstickstick Index.

Speaker 1:

The Lipstick Index.

Speaker 2:

Yeah, the idea is that when the economy is bad, people buy more lipstick. It's like a small, affordable luxury that makes them feel better.

Speaker 1:

That's kind of interesting.

Speaker 2:

Right. Then there's the Big Mac Index.

Speaker 1:

Oh, I've heard of that one.

Speaker 2:

Yeah, it's used by the Economist magazine to compare the value of different currencies based on how much a Big Mac costs in each country.

Speaker 1:

Right.

Speaker 2:

And then there's the Hemline Index.

Speaker 1:

The Hemline Index. What's that one?

Speaker 2:

It's the idea that the length of women's skirts goes up when the economy is good and down when it's bad.

Speaker 1:

Oh wow, that's a new one for me. So are we saying that this Skyscraper Index is as reliable as those other indicators? Well, not really.

Speaker 2:

The Skyscraper index is as reliable as those other indicators Well, not really the skyscraper index and those other fun indicators. They're more about sentiment. They show us how people are feeling about the economy.

Speaker 1:

Right, so they're not like hard data, but they can give us some clues no-transcript.

Speaker 2:

The start of a new skyscraper project shows us that there's a lot of optimism and money flowing around, but if the building is finished near an economic downturn, it suggests that maybe that optimism was a little too much.

Speaker 1:

It's like a warning sign.

Speaker 2:

In a way yeah.

Speaker 1:

So let's bring this whole thing into the present day. Our sources talk about how the COVID-19 pandemic and remote work are changing things. How does that fit into all of this?

Speaker 2:

This is where it gets really interesting. The pandemic and the rise of remote work have completely changed how a lot of companies operate.

Speaker 1:

Yeah, it's like everyone realized they don't need to be in the office all the time, exactly.

Speaker 2:

And that means there's less demand for huge office buildings.

Speaker 1:

Right, because if people are working from home, you don't need as much office space.

Speaker 2:

Right, and that could have a big impact on the whole skyscraper curse thing. If companies aren't building giant headquarters anymore, that could break the historical pattern of overbuilding during economic booms.

Speaker 1:

So maybe the skyscraper curse won't be as relevant in the future.

Speaker 2:

It's definitely possible. Our sources suggest that the focus might shift away from physical skyscrapers and toward things like digital infrastructure and AI.

Speaker 1:

So instead of competing to build the tallest building, countries might compete to have the best technology.

Speaker 2:

Yeah, that's one possibility.

Speaker 1:

It's fascinating to think about how this all might play out.

Speaker 2:

For sure.

Speaker 1:

So, to wrap things up, it seems like the skyscraper curse might be more of an interesting coincidence than a foolproof predictor of economic doom, but it still tells us something important about human behavior and how it connects to economic cycles.

Speaker 2:

Totally. It shows us how easily we can get caught up in the excitement of a boom time and make decisions that we might regret later. And these skyscrapers, they're like these physical reminders of that cycle of boom and bust.

Speaker 1:

Yeah, they stand for both our ambition and our tendency to sometimes overreach Right. And as the world changes and our priorities evolve, these skyscrapers might not be the main symbols of economic booms and busts anymore.

Speaker 2:

Yeah, maybe we'll be looking at different things in the future to try to predict what the economy is going to do.

Speaker 1:

So here's a final thought for everyone listening as we move into this new era of technology and remote work what will be the new indicators of economic health or trouble? Will it be the size of data centers, the value of virtual worlds, something else entirely? And will human ambition always have this kind of push and pull relationship with the economy? It's something to keep in mind as we watch how the world changes.

Speaker 2:

Absolutely. It'll be fascinating to see what the future holds.

Speaker 1:

Thanks for joining us for this deep dive into the skyscraper curse. We'll see you next time.

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David (Viacheslav) Davidenko

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