No, the Architecture Billings Index does not track the number of stories on the tallest building in Billings, Montana. We're guessing that ABI has been holding steady at 5 for a few decades now (nope, we just looked it up: tallest building in Billings is the First Interstate Center and its 20 stories tall).
In the world of finance, the ABI provides a leading indicator of construction activity. It is put out each month by the American Institute of Architects. The index combines survey data related to billings (no, not that Billings again...as in bills sent out) by architecture firms. Basically, a high number of billings suggests that people are hiring a lot of architects.
Since the first step of building something is to have an architect design it, a high level for the ABI suggests the likelihood of strong construction activity down the road. The AIA estimates that the index provides a lead time of about 9 to 12 months, meaning a rise in the ABI is correlated with higher construction activity 9 to 12 months down the road.
The index is used to measure nonresidential construction, or projects that involve something else than places for people to live (like houses or apartment buildings).
Related or Semi-related Video
Finance: What is a Business Cycle?3 Views
Finance allah shmoop What is a business cycle Well here's
a guy giving his cycle the business Yeah the bike
moves forward in time but this little white mark on
the tire while it keeps returning to the same place
again and again and again So yeah that's the foundation
of the notion of business as a cycle time continues
but you know business gets hot then cold then hot
then cold and yeah you get the idea Well why
is this the case Well lots factors They mostly revolve
around the wild pagan dance of greed and fear And
they get exacerbated when governments actively monkey around with the
cost of renting money otherwise known as the raising and
lowering of interest rates And if you're new to this
whole space if you lower interest rates and make money
cheap to borrow you heat up the economy or at
least you encourage it to get hot And if you
raise the cost of borrowing money well then you're going
to try to cool it off And the reason he
might want to do that is if inflation is roaring
right All right well in the us the business cycle
Runs roughly every eight years for what is called the
short cycle of business cycles for reasons only partly known
to humankind the money cycle revolves around the presidential election
cycle when historically every couple of terms the population gets
sick of one process of messing up government and they
choose to elect a new way to mess up government
So that's The short cycle happens every seven or eight
years and you see it in the stock market with
generally meaningful corrections Along that pattern there's also ate a
long business cycle that sees major shift about every quarter
century World wars affected numbers Technology innovation affects the numbers
and other exogenous factors like pollution and labor replacement by
robots Yeah yeah it's coming and healthcare or disease changes
and or big innovations that completely repaint the pavement such
that the tire slipped and turn and twist trying to
keep the bicycle upright The key goal Look outfor bollards
Up Next
What is economic cyclicality (“boom or bust”)? Economic cyclicality and “boom or bust” cycles refer to the periods of success or decline th...
What is a Bubble? In markets and economic cycles, any kind of rapid run up trend characterized by over exuberance and emotion over fundamentals tha...
What is speculation? Speculation refers to a high risk, high reward scenario in investing. When an investor engages in a speculation, they take on...