Table 1: World's Tallest Buildings
Panic of 1907
Panic of 1907
40 Wall Street
World Trade Center
Above is the chart I pulled from the article, and it looks like there is something to this idea. Now the announcement of a worlds largest building didn't always mean that an economic occurred, sometimes it didn't, but that is because I don't think the announcement of a super tall necessarily indicates an economic bubble. I'm not disagree with the ultimate conclusion from Mises, in fact I agree with it, rather, given what I have seen from commercial real estate, I think I can explain it.
The reason why so many super talls coincide with economic crashes is that many of those super talls were announced during a period of very vigorous real estate development. The author, in the podcast, likened commercial real estate development like the development of the railways in the 19th century, I couldn't agree more with this assessment. One thing we need to understand about inflation, which is simply more money entering the money supply than can be supported by economic production, is that it doesn't happen all at once. The funds are often allocated to bubble areas first, as investments, and then gradually spill over, like water flowing from on overfull pond into another pond, into other aspects of society.
We saw this with the tech and residential bubble, which was heavily pushed by easy money policies of the Fed, as the stock markets and housing markets saw massive sustained gains well outside of their historic 100 year norms. This is one of the reasons why inflation was so low, though the CPI understates inflation in my opinion, from the mid 1990s to now. While some of the money being inserted into the market did end up affecting consumer products, most of it had made it's way into the real estate and stock market; in the Captain has argued, rightly in my opinion, that continued gains in the stock market is nothing more than money being pumped in the system, i.e inflation.
This means that the development of real estate projects, and perhaps skyscrapers development in general, are a good indicator of an economic bubble or at least peak economic cycle. Skyscrapers are rather costly developments, with substantial risk as they are rarely constructed with a 100% pre-lease agreement, and are usually only undertaken during periods of high economic activity or irrationality.
In my own city, while there had been development of some downtown apartments, no commercial skyscrapers had been developed until now, there wasn't a market for there. A few months ago there have been a few announcements for speculative office construction. Now I love skyscrapers so I think this is cool, but I cannot deny, that this might be indicative that our economic "boom" since 2009 has run it's course.