This paper appeared in the journal Technological Forecasting & Social Change:
Sunspots, GDP and the stock market (View paper PDF)
by: Theodore Modis
Abstract
A correlation has been observed between the US GDP and the number of sunspots as well as between the Dow Jones Industrial Average and the number of sunspots. The data cover 80 years of history. The observed correlations permit forecasts for the GDP and for the stock market in America with a future horizon of 10 years. Both being above their long-term trend they are forecasted to go over a peak around Jun-2008.
The paper concludes:
…..If one accepts that there must be some correlation between GDP growth and stock-market growth as displayed in Fig. 5, then one cannot use the lack of scientific proof as an argument against the existence of correlation between the stock market and sunspots (Fig. 2), or between GDP and sunspots (Fig. 4). On the other hand, if these correlations are real, then we can venture long-range forecasts for the DJIA and the GDP….
….The levels forecasted here for the DJIA of 13908 in mid 2008 and 7919 in early 2014….
While there may be some correlation between sunspots and the DJIA and GDP, there’s also much larger drivers, such as panic and bad loans in the banking industry. Sir William Herschel discovered a correlation between wheat prices and sunspots. In 1801 he published two papers that, in part because of Herschel’s reputation as England’s “Kings Astronmer”, effectively launched the field of solar influences on Earth’s weather. It is in the first of these papers that Herschel discusses an anticorrelation between the price of wheat and the number of sunspots visible on the Sun.
So, I suppose DJIA/GDP links aren’t that far fetched. I remember well when Carl Sagan said in his famous 1980’s PBS special COSMOS that “we are all made of star-stuff”. Thus is doesn’t seem that unplausible that the ebb and flow of our existence continues to be linked to our nearest star.
h/t to Paul Biggs
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And to think I’ve wasted all that time reading P&Ls…
I bet Leif will have a comment or two on this…
REPLY: I’m sure he will, but hey, we all need something to take our minds of the election for a momente or two. 😉 – Anthony
correlation is not necessarily causation…
I hope Leif Svalgaard shares his thoughts on this, although I can readily imagine his reaction.
Oh puh-lease! What unrelieved tosh. This baloney resurfaces at regular intervals. I recall it getting a lot of credulous press ago when Principal Trust in Canada failed.
That was meant to read “…years ago…”
I have a hunch that in this complicated world of cycles, we could find that some simple bug somewhere has an 11 year cycle. Or that some animal has an 11 year cycle. Or a plant. Or productivity in a class of students in some town somewhere. It kind of reminds me of the old saying about hidden code. If you look hard enough, you will find the word “Devil” spelled out in a nondescript sentence with every 11th letter in a nondescript novel on every 11th page. Do you really think this is predictive correlation and not just pure dumb luck?
About the same level of statistical confidence as temperature reconstructions used by the IPCC.
The most interesting thing about this correlation is that the stock markets cycle preceeds the solar cycle. Does the market’s fall over the last two months “prove” we are headed for a Dalton or Maunder Minimum? Maybe the term for investment bankers as “Masters of the Universe” is more than just hyperboli.
I GET IT! VERY FUNNY!
Surprisingly there does not seem to be a correlation with April 1st.
… Received 6 May 2007; accepted 13 June 2007 …
Oh yeah, I needed an article like this today!!!! I’ve seen some nice graphs of GDP and temperature that matched up nicely. I’m glad most posters see this for what it is.
REPLY: Like I said…we all needed something to take our minds off the election. 😉
– Anthony
This just proves that sunspots are where the BS from the financial analysts has hit the sun and temporarily quenched it.
Since the DJIA leads sunspots, you should be able to calculate the speed of BS through a vacuum. Interestingly, the speed of BS through air seems to be much faster.
This DJIA-sunspot correlation is as ridiculous as the CO2-GW correlation.
Try to find one investment banker who’ll buy into this.
If Leif comments on this, then it means he has lots of idle time on his hands.
Check out the blue dot cameras for Cabbage Hill above Pendleton:
http://www.tripcheck.com/Pages/RCMap.asp?mainNav=RoadConditions&curRegion=3
Apparently, this snow storm is highly correlated with the sunspot flares we have been experiencing. And with a time lag to boot.
See: http://www.frbatlanta.org/filelegacydocs/wp0305b.pdf
It gas biological explainations for influences on moods and market reactions
It looks like changes in suns spots lags about 5 years behind the DJIA. The only possible interpretation is the DOW controls the sun, and since the sun controls global warming, therefore the DOW controls global warming.
Bern is funny. Amusing visuals.
You know you’re having a bad day when potty language and the guilty chuckle it elicits – are your high point.
It’s like you said Anthony –
Anything to get our minds off the tsunami that is just off shore.
What were they playing while the Titanic was sinking . . . . ?
I believe George Box said, “Essentially, all models are wrong, but some are useful.” I think this model falls into the “not so useful” category! Very funny, Anthony!
Striped Bass. That’s the predictor, right there.
They run on a 12yr cycle…and have been on the down slope since about 2000.
so that ties into warming cycles, GDP, stock market, and one other important factor for many of us…HAIR LOSS.
Jim
And yes…we needed this post :*)
Telling the truth about climate change has become a revolutionary act
http://canadafreepress.com/index.php/article/6007
“Being an objectivist means never having to take responsibility for your actions.” The cliché about models is garbage in garbage out (GIGO), but the issues are who put the garbage in and who decided what happened to the garbage while it was in the model and then how was the garbage used once it was out?
“If you put tomfoolery into a computer, nothing comes out of it but tomfoolery. But this tomfoolery, having passed through a very expensive machine, is somehow ennobled and no one dares criticize it.” – Paul Gallois
The IPCC climate model is the sole source of evidence that human CO2 is causing climate change yet it is being used to create completely unnecessary taxes, policies and hardships.
Many factors contribute to the formation and spread of collective delusions and hysterical illness: the mass media; rumors; extraordinary anxiety or excitement; cultural beliefs and stereotypes; the social and political context; and reinforcing actions by authorities such as politicians, or institutions of social control such as the police or military. Episodes are also distinguishable by the redefinition of mundane objects, events, and circumstances and reflect a rapidly spreading folk belief which contributes to an emerging definition of the situation.” – Bartholomew and Goode
“And given that virtually no research into possible natural explanations for global warming has been performed, it is time for scientific objectivity and integrity to be restored to the field of global warming research.” – Roy Spencer in his testimony before the US Senate EPW Committee
The real question is the speed of BS through the media. That appears to be nearly infinite. The badder the science, the faster it goes.
If the length of women’s skirts relates to the Dow, as does the winner of the World Series (someone ‘proved’ that once), then it all ties into sunspots.
Sunspots Rule! But what if we don’t have any? Back to the tea leaves…
On its face the correlation of market and GDP seems silly, but there may be something there, though not directly. The market anticipates the trend by about 6 months. If other metrics indicate some condition in the future, the market anticipates that and moves ahead of fact. So, let’s say it looks as though there will be colder weather in the spring delaying spring plantings. The overall production would be expected to be lower and prices might rise. Speculators would raise prices ahead of the fact. The colder spring might be actually caused to some degree by reduced solar activity, but the speculators make their moves on anticipated crop production and “market forces,” while ignorant of solar activity.
have you guys seen this article?
http://www.warwickhughes.com/blog/?p=180#comment-20487
it’s interesting that we may be beginning an energy rationing scheme just when we need plentiful, inexpensive energy the most. really sad…