The Skyscraper Curse: An economic indicator?

Could it be true that the taller the skyscraper the harder the fall? The correlation between completions of tall skyscraper buildings and economic is a fairly familiar concept. The Skyscraper Index was created by Andrew Lawrence in 1999 and explained that constructions of tall skyscrapers were representative of beginning of economic downturns. This trend of correlation between the construction of tall skyscrapers and economic business cycles that ended in recession was first studied in the 1930s, which was around the time of the Great Depression in the United States.

Historical examples of this phenomenon from the past century include the completion of the Empire State Building in the 1931 when the Great Depression had just started, the completion of the Petronas Twin Towers in Malaysia in 1996, which was when the Asian financial crisis began, and of course, the completion of the Burj Khalifa in Dubai in 2010 which was right after the 2008 worldwide financial crisis. Another key example would be the construction of the Sears Towers and the World Trade Center Towers that were built in 1973, during both the 1973 stock market crash and the 1973 oil crisis. Andrew Lawrence hence argued that almost all major skyscraper construction initiatives were pre-cursors to financial busts. The theory suggested that the building of skyscrapers generally started during the later phase or the peak of the economic boom when employment is usually high and the economy is growing, which is followed by economic downturns and low unemployment rates. So even though all economies go through business cycles, skyscrapers especially tend to be constructed in the last or peak phase of an economic boom and finish in a recession.

The skyscraper index might not seem legitimate and it could be possible that the aforementioned examples could be coincidences, because correlation does not always mean causation: and one may think why would impactful structures like skyscrapers that could be highly profitable be destructive to the economy? However, the Barclays Skyscraper Index Report shows that not only is there correlation between the construction of tall buildings and recession, the report also proposes that the rate of increase in the height of the skyscraper could indicate the extent of the financial crisis. The report tracks the building of new skyscrapers and their increase in height in comparison to the following recession that occurred from 1873-1878 until 2007-2010. There seems to be a trend in the study that the rate of increase in record-breaking skyscrapers is directly related to the magnitude of the economic downturn that occurred after.


Nevertheless, there have been some recessions that occurred in the past century that were not preceded by the construction of a tall skyscraper. For example the skyscraper index failed to predict economic downturn in Japan, which had a recession in 1990, and it also did not provide any indication of the economic recessions of 1920-1921, 1937-1938, and 1980-1981. An economist Mark Thorton commented, “both the causes of skyscrapers reaching new heights and severe business cycles are related to instability in debt financing”. Of course, economic indicator can predict perfectly, but the skyscraper index could be a basis to predicting some form of crisis rather than specifically speculating the severity of economic business cycles. It would be interesting to see what this could mean for the world’s fastest growing economies, India and China, which have multiple large scale skyscraper projects lined up for construction within the next few years.







Playing ‘Footsie’ with the Economy

As Coco Chanel once said, the number one rule for a lady is to “keep your heels, head, and standards high.”

…. but which ‘standard’ was she talking about?

Photo of a 1kg gold bar isolated on a white background with clipping path

Using fashion trends as economic indicators is not a new concept. In fact, economists have been using them in conjunction with the ‘retail sales index’ for many years. It began in the 1920s with George Taylor’s hemline theory, as he speculated that women wore shorter skirts as way to show confidence during strong economic periods. The trend then transitioned to lipsticks, when after 9/11 Estee Lauder suggested that the sharp increase in their sales was a direct response from women who were using impulse spending as a way to cope and grieve. More recently, however, economists have been using the “high heel index” as a way to measure consumers confidence in the economy.

While measuring the height of a heel may seem ridiculous, a recent recent study by IBM suggests that there is a strong correlation between the height of one’s shoe and the success of the economy. Their report comes as a result of an in-depth social media analysis, where researchers tracked trends and posts about shoes across the internet to understand what types of heels women were wearing and how high they were.



According to the report, heel heights have traditionally increased during harsh economic times, as fashion is used as a form of escapism and expression. However, more recent data indicates that this trend may be “last season”. In 2009, shoe manufacturers and retailers were reporting that they were selling more lower height heels and flats in their store. Since this was still during the recession, IBM analysts theorized that there must be a shift taking place with consumers. By wearing lower heels, were women saying that no longer felt the need to be showy or ostentatious? Or were they just trying to be more comfortable on their walk to work?

Although there is no perfect answer or way to measure the index, it is clear that economists can gain tremendous insight about our economy and consumer confidence by looking at even the most commonplace things.


The Floral Industry- In Sync with the Economy


When thinking about the economy and the spending habits of Americans, the floral industry came to my mind because it is a product that Americans shift from feeling obligated to buy (for holidays, special occasions like weddings or funerals) or buy on a whim, and this interested me. Gifting a bouquet of flowers may just seem like a kind gesture, but the state of the floral industry can be an economic indicator.

Although the floral industry is a growing industry now (its total retail sales in the U.S. in 2015 was $31.3 billion, it’s highest sales yet) it’s growth and movement typically mirrors the economy. From this list of floral sales over the years, it is revealed that when the recession hit, the sales fell by $1.4 billion. Since the recession, the floral industry has been able to recover and grow by $2.4 billion in sales. This is $1.3 billion more than the industry’s previous peak in sales before the recession.


From my research, I have found that the floral industry’s state moves alongside the economy’s state, or in other words, the floral industry is in correlation with the U.S. economy. As U.S. consumer spending increases overall, floral sales increase. The average U.S. consumer spending monthly average in September in 2008 before the stock market crashed and the recession began, was $97. From then on after that number fell down to being in the $60-$70 from 2009-2012. Now in 2016, that consumer spending is back to an average of $90 a month. An interesting finding though is that the floral sales biggest time of growth in 2012 was much more extreme than the growth of consumer spending, and the sales have continued at this rate. The alignment of U.S. consumption and floral sales yearly are further depicted in the charts attached.



Average Holiday Expenditure on Flowers in the United States from 2004 to 2015 in U.S. Dollars

Average Holiday Expenditure on Flowers in the United States from 2004 to 2015 in U.S. Dollars

When consumers have more money Buying flowers to give to someone as a thoughtful gesture or buying flowers for yourself to enjoy can be thought of as being frivolous, this is because the flowers are bound to die shortly after purchasing and are just to be looked at. to spend, and they already typically purchase flowers, they will buy fancier and more expensive flowers. When the floral industry is doing well the economy is as well. But, you can also tell that Americans have less readily available money when they stop spending on floral gifts for loved ones. If floral sales during one of the big bouquet gifting holidays, such as Valentine’s Day or Mother’s Day, isn’t at a similar rate to previous years, this can show that the economy isn’t doing well. This is because people do not have the money to spend on flowers on days that they traditionally buy flowers on. Or those sales can be down because people are buying less expensive flowers than they typically would when the economy is well. The types of flowers being bought and the amount of flowers being bought by consumers can show the economy’s state of being. This makes sense for the floral industry especially since it is a luxury business; people will not buy luxury goods when they think they need to save money or are not financially comfortable.

An interesting note about the floral industry is that demand for flowers has not changed much over time even when the industry has gone through many changes, besides during times of economic instability. The floral industry shifted when America went from an agricultural society to an industrial society. The farming of flowers in the floral market shifted from being grown in the United States to being grown elsewhere and are now imported. Even more recently, the floral industry for the producer took a toll when the 1991 Andean Trade Preference Act was enacted. This act was to motivate South American countries from being involved in drug trafficking to being a part of legal industries, such as growing flowers. This continued to take away from the dwindling amount of flower farms in the U.S. because it has made it more difficult for them to compete with the prices of the South American-grown flowers; now 70% of retail flowers in the U.S. are grown in Colombia. Even local flower farms and retailers have attempted to start movements for consumers to buy locally grown flowers but it has not picked up and the amount of floral imports for American floral companies and retailers has remained.

Like the stable demand for florals, predictions of the floral industry in the future includes the continued growth of the industry due to the shift from Baby Boomers’s spending habits on florals and luxury good to the Millennial’s spending habits for on these goods. From the Retail Feedback Group survey in September 2015, Baby Boomers are more likely than other generations to purchase flowers once a week or every two weeks whereas Millennials buy flowers less often and spend more. As Millennials continue to grow up they will be spending more on florals for events such as weddings, parties, work events and funerals than any generation has before. These occasions are better business for the flower industry, and they will increase alongside the economy’s continued recovery from the recession, since the amount of these events decreased during that time. If the floral industry’s correlation with the economy continues as it has been and if this prediction is correct, the economy can be predicted to grow as well.



The Skyscraper Curse

Real estate development has always and still does account for a fairly large proportion of GDP of every sizeable economy. The development of tall skyscrapers has historically been offset during times of economic expansion and booms when funds and monetary resources are more easily accessible, and there is assurance of profitability, naturally. Also, skyscrapers are fairly lucrative by nature because they create more space horizontally in the same plot of land. However, skyscrapers are often just conjectural development projects that are built without any concrete plans relating to usage of the space being created. However, the completions of tall skyscraper buildings seem to have formed a recurring pattern, in the past century or so, of often being pre-cursors to economic recession or financial crises. This correlation between the construction of tall skyscrapers and economic business cycles that ended in recession was first studied in the 1930s, around the time of the Great Depression in the United States. Historical examples of this from the past century include the completion of the Empire State Building in the 1931 when the Great Depression had just started, the completion of the Petrnoas Twin Towers in Malaysia in 1996, which was when the Asian financial crisis began, and of course, the completion of the Burj Khalifa in Dubai in 2010 which was right after the 2008 worldwide financial crisis. Another key example would be the construction of the Sears Towers and the World Trade Center Towers that were built in 1973, during both the 1973 stock market crash and the 1973 oil crisis. According to substantial research done by economists, and there are conflicting opinions about weather there seems to be a correlation between skyscrapers and economic business cycles. While there are some rational explanations as to why the constructions of skyscrapers began during economic booms and ended during major financial crises, opposing research has also shown that there is almost no correlation between construction of skyscrapers and economic conditions, and that past events have been, to an extent, coincidence. Economists who concur with the fact that there is an important association between constructions of skyscrapers reinforce the Skyscraper Index, which was created by Andrew Lawrence in 1999. It states that tall skyscrapers have escalated right before or after serious economic downturns. It is self-evident that large projects like building one of the tallest skyscrapers in the world would get investment during an economic boom, due to lower interest rates, higher demands and easier access to monetary resources. However what’s interesting is that all of these components reach a peak during the growth or construction period of the building of a skyscraper, and this right when the economy has already reached its peak and is about to go into a recession. On the other hand, there are also exceptions to this and there are many economists who would agree that the skyscraper index is not a good enough economic indicator. But it is still an intriguing concept. There are numerous skyscraper projects coming up in the world’s fastest growing and high potential economies, India and China and it would be gripping to see how the completion of the new structures could be correlated to economic conditions in the future.






The Happy Meal Indicator

We often search to find indicators to help us prepare for the good and the bad. An economic indicator is defined as a statistic used to gauge future trends in a nation’s economy. Reports on these indicators are released monthly, quarterly, and annually to help the public understand how things are going within our country. Gross Domestic Product (GDP), personal income, and retail sales are among the more popular indicators we analyze.

However, there are many other markers that people have come up with to predict the economy. Notoriously known by its slogan “i’m lovin’ it” and its clown mascot, McDonald’s has contributed to create affordable meals during times of need. While most people are nervous and sad when the economy is falling or acting poorly, the Happy Meal Indicator reacts in direct correlation with the economy.

Happy Meal

At McDonald’s and other restaurants around the globe, the Happy Meal Indicator works such that “in an effort to protect profit margins, restaurants downsize free offerings to kids like crayons and toys” (Platt). This measure allows us to see how big corporations are adjusting to the poor economic activity and loss in revenue. During the 2009 recession, gourmet burger chain Red Robin halved the amount of crayons they gave to kids to color at their tables. I would assume many children were upset that green was no longer when they were given blue and red crayons.

REd Robin

There are no actual numbers that can be calculated from the Happy Meal Indicator, other than alerting us how the hospitality industry is reacting. By analyzing the expense cuts on things such as toys, crayons, and other freebies we are able to predict that corporations have less free cash on their balance sheet and spending is becoming a concern. Another example of this is that many hotels held back from leaving chocolates on their guests’ pillows during the recession as a means to save money.

Although restaurants like McDonald’s and Red Robin look to cut costs during these hard times, they have a better survival rate than others. People want to find the cheapest alternatives to feed their family and support a “normal” lifestyle, so they turn to the dollar menu and cheap food options.

We may or may not notice when our favorite brands have left out a toy in our happy meal, but economists do. There are reasons behind this madness, the themes of toys always coincide with the latest hit film or a major event going on. It is a way to attract people to spend more money; however, the companies can sometimes no longer afford this marketing stunt. Now understanding the Happy Meal Indicator, we will be one step ahead of our colleagues only by knowing whether or not we receive a toy or if our Red Robin no longer has crayons.

Movie Theater Popcorn Index


Patterns in consumer spending, which account for more than two-thirds of the economy, are most often the principal influence on both the stock and bonds markets. In times of economic downturn, both consumer confidence and consumer spending become diminished as people tighten their belts.

The 2008 US and world financial crisis that spurred economic recession resulted in a dip in consumer spending between a period of two years [2008-2010], according to the Bureau of Economic Analysis.

In 2009 US consumers spent 2.8 percent less, on average, than they did in the previous year. Expenditures essentially decreased across the board and entertainment decreased by 5.0 percent from the Bureau of Labor Statistics report from 2008. In spite of the overall decreases in spending U.S. box office sales hit an all-time high in 2009 at the height of the recession.

box office

Short-term enjoyment as a means of forgetting economic despair is not uncommon consumer behavior. In fact, after the crash of 1929 that led to the Great Depression consumers flocked to their local theaters. This sort of escapist mentality was mirrored again during the Great Recession, with films like James Cameron’s record-breaking Avatar producing 2.788 billion USD in ticket sales.


ODEON Cinemas, the largest cinema chain in the United Kingdom by market share took this traditional consumer response a step further by observing trends in the company’s concession sales. Though not a perfect science the chart [below] indicates that while economic downturn may lead to more box office sales, dips in the FTSE – an indicator of consumer confidence – correlate to a decline in the consumption of concessions, more specifically popcorn for U.K. cinemagoers. The cause of these trends is obviously debatable but likely do to the fact that while people may be running to the cinema during periods of economic downturn, they are not necessarily buying up concessions.


odeon popcorn index

The Odeon popcorn index of economic confidence compares average popcorn sales per ODEON cinemagoer with the Financial Times Stock Exchange 100 Index (FTSE 100 Index) of companies on the London Stock Exchange with the highest market value.

Rupert Gavin, chief executive of Odeon, tracked week-by-week popcorn sales and observed that sales of popcorn and the FTSE were not only correlated. At one point sales of popcorn were leading the FTSE.

Between June and July of 2009, popcorn sales continued to rise while the FTSE took a short drop, spiking up again by mid-July. This was significant because it meant that popcorn sales had the potential to predict future economic climates, while also reflecting current climates.

There is no way of knowing for sure whether or not movie theater popcorn sales will remain an economic indicator; however, at least for now they appear to hold a certain level of credibility for gauging the market and consumer confidence and spending.


Coffee as a leading economic indicator

A recessive economy is no match against the steaming morning luxury that fuels the pulse of the city. Consumers pinch their pockets for the morning Cup O’ Joe, even during economic strife, but the foam-topped coffee can get expensive overtime.


Folks that are willing to spend as much as $6 a day on a morning beverage is a curious concept in a struggling economy. Spending habits on coffee are inextricably linked to an established morning routine. Coffee drinkers are creatures of habit. The coffee drinker views the cup as an inseparable part of the daily ebb and flow of life. Coffee sales outside of the home skyrocketed in 2004, likely due to the success and popularity of popular corporate coffee houses. Coffee transformed from an in-home treat to a fast food experience.

Over the past decade coffee consumption outside the home has shown some reaction the the nation’s economy. In 2001, coffee consumption outside the home was in the low 30% range as the nation entered the economic recession. Ryan Sweet, a U.S. economist for Moody’s Analytics alludes that a low coffee consumption percent is directly correlated to a high unemployment rate. In 2004, when the U.S. unemployment picture turned around for the better, outside home coffee sales soared from 29% to 40%.


Coffee Consumption Outside of the Home

YEAR 2001 2002 2003 2004 2005
Outside Home 32% 34% 29% 40% 39%
Unemployment 4.7% 5.8% 6.0% 5.5% 5.1%
Economic Climate Backdrop Recession “Jobless Recovery” ” “ “Unemployment Improves” ” “
YEAR 2006 2007 2008 2009 2010 2011
Outside Home 40% 33% 36% 35% 30% 27%
Unemployment 4.6% 4.6% 5.8% 9.3% 9.6% *9.1%
Economic Climate Backdrop ” “ Recession ” “ ” “ “Jobless Recovery” ” “

*Seasonally adjusted unemployment rate for month of July from Bureau of Labor Statistics

Source: National Coffee Association of USA for coffee consumption in the home and outside of the home; Bureau of Labor Statistics for annual average unemployment rate figures; Economic climate backdrop Moody’s Analytics.


According to one economist, however, coffee will only suffer in the most serious times, and is considered as necessary as the utility bills and automobile gas. Most coffee houses are doing as well as they ever have, and according to Verner Earls of Chauvin Coffee Company, some coffee houses have reported record sales. “People aren’t going to give up the latte,” claims Verner. “Bigger expenses will go first.” The mindset behind the consumption of coffee allows coffee houses to weather recessions well.

This general trend for coffee consumption does not leave all coffee houses safe. Many local shops struggle with a crunched economy, as well as corporate coffee chains being forced to close down stores. In 2008, during the heat of the recession, Starbucks Coffee announced it will close 600 stores across the United States, according to the New York Times. This move by Starbucks cost over 12,000 employees their jobs, the most in its history (via the New York Times).

The fall of Starbucks in 2008 reveals that java sales are a hot economic indicator of the state of the economy. As the dollar collapses, so does the average American’s spending power.

Coffee has become a fast food luxury treat, all of which its raw materials: sugar, coffee, milk, wheat, and chocolate are all skyrocketing in price due primarily to the fall of the dollar, according the the Huffington Post. This hike in prices causes the cup cost to steadily rise.

Coffee sales, specifically using the example of Starbucks Coffee establishments is a prime example of how a falling dollar will make something like coffee, an item that Americans gorge on, daily for that matter, too expensive to include in the morning ritual.

Speaking from experience, a trip to a coffee shop is an absolute treat that I enjoy frequently with my mom. So much so, that we budget our social coffee hour into our weekly expenses tough economy or not.





Global Green Economy Index (GGEI)

After years of discussions about issues such as climate change, air pollution and resource shortage, sustainable development has become a popular concept that many countries want to improve. Some countries really are trying hard. Germany, for example, has been working everywhere from enhancing sustainable transportation to increasing citizens’ involvement in green policy. But there are also countries which think they are doing enough, yet actions don’t come close to making up for the damage that their economy does to the environment.

It’s interesting that our countries never get tired of competing with others. Imagine a flock of children are trying to prove to their mother, that who’s the one that loves her the most. Some make a lot of money; some take good care of her. In this case, the mother (the earth) doesn’t speak, so we need judges.

屏幕快照 2016-09-01 下午12.21.32

The Global Green Economy Index (GGEI) by Dual Citizen LLC is designed to measure and rank countries’ performances in the green economy. In other words, this is a real indicator of how well countries are treating the environment. GGEI was first published in 2010, and has been acknowledged as one of the main indexes to rank national performances of green economy.

There are two sets of ranking: perception and actual performance.

The perception survey is conducted based on the respondents’ assessment on their own green economy performance. The actual performance is evaluated by expert practitioners. Both results were based on the same set of indicators which lie under four main categories: Leadership & Climate Change, Efficiency Sectors, Markets & Investment and Environment & Natural Capital.

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The latest 2014 GGEI report evaluated 60 countries’ performance based on the above categories. Sweden, Norway and Costa Rica are winners of the first three places.

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While most of the nations have similar ranking between the two, there are countries that show significant difference. For example, United States is 6th in perception and 28th in actual performance. China’s perception ranking is 13th yet its actual performance ranking is 55th.

Obviously, the fastest growing economy did not reach its expectation at all. What went wrong? If we break down the four categories, China is investing heavily on the green market, but its efficiency definitely needs to be improved. Environment & Natural Capital is China’s weakest categories, everybody in and away from China wonders when people would be able to breath in Beijing without worrying getting sick. What can the government do to bring this score up? Perhaps that’s what China will get inspired by reading this report.

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GGEI is an important communications tool for policy makers and international organizations, because it is a good reference point. While most countries share a common goal of maintaining a healthy environment, GGEI provides criticism and reflection on different aspects. It helps countries to realize what is working out and what more needs to be done.

The 2016 GGEI report will be available in the fall, according to the Dual Citizen website.

Economic Indicators: Beer

Economic Indicators: Beer

Image result for beer

The world’s economy is constantly changing and while people commonly use economic indicators such as GDP, unemployment rates, etc. to gauge the economy, other surprising measures can be decently accurate. One interesting economic indicator is beer. When the economy is good beer consumption at restaurants and bars are relatively stable/high. However when the economy is slower, beer consumption also slows down. The reason for this shift is that when people have less spending money they generally go out to eat less and even when they do eat out they are less inclined to purchase drinks at dinner. Similarly people may frequent the bar less and if they do go to the bar they might drink before hand or purchase less drinks at the bar to save money. Instead they might purchase beer at a grocery store and drink it at home or forego drinking entirely. People are less likely to spend money are items that are not considered necessities. The consequences of declined beer consumption affects more than just bars and restaurants. It affects the waiters and waitresses at the bar and the breweries themselves. The waiters make less money and tips, which affects their purchasing power. The breweries may also earn less revenue due to decreased consumption. As a result they may slow down production and produce less beer. This could also have a domino effect on their employees if they no longer need as many workers to sustain the demand on their products. All these consequences also affect tax revenues. The government will not be able to collect as much tax revenues if less product/money is being earned.



Mosquito Bites: Painful For The Economy as Well

No one likes mosquitoes. They act as irritants and leaches, using individuals and animals to survive. Now, there might be an even greater reason to dislike them; they also hurt the bottom line. Recent studies have indicated a correlation between the incidences of mosquito bites and a straggling economy. The greater number of mosquito bites, the worse shape the economy is in.

The theory behind this concept is exemplified in the great recession. Since real estate was at the forefront of the economic plunge, many individuals lost their homes or failed to maintain them. All of these foreclosures left thousands and thousands of abandoned or ill maintained properties. Without anyone to maintain the homes, and more importantly the pools,  the water turned stagnant in various locations. Combine that with certain humid climates, and these pools became nesting sites for mosquito breeding.

A Green Pool in Las Vegas

For instance, in Maricopa County, Arizona the unattended ponds and pools have become “green pools, according to authorities.” These pools are the ones where water has gone stagnant due to various levels of negligence, a lack of care driven by market forces. In 2009, 4,000 “green” pools were attended to by crews treating the stagnation. By comparison, only two years earlier the number was closer to 2500. This almost 60% jump correlated closely with an area that was hit extremely hard during the recession.

In areas where building was in a boom, many new developments placed pools in the backyards of individual homes. When people could no longer afford to maintain these pools, and for some, even live in the homes, mosquitoes swarmed.

In short, when the economy is bad, and people have to make hard financial choices, giving up pool maintenance is a necessary cut. The more pools across the country that go untreated, the worst shape the economy is in and the more homes mosquitoes find. So, if you hear more buzzing and see more bites, it is not just those small red dots you have to worry about. It could be a sign of great economic struggle on the way.


Cleaning up the mess



Unexpected Indicators