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
lolgasm @ur momisugly this
The price of corn spiked in July on errant reports of the massive flooding causing huge shortfalls. Until economic investigators from Pricneton went out and checked the silos in the Midwest where it was stored. There, they found that last year’s crops were so abundant that even after all the feed corn and ethanol corn orders were filled, the silos were still stuffed to the gills with the excess.
Speculation, pure & greedy was the only explanation.
If the correlation were more consistent I might give it a go, but the intervals are out of phase in spots almost as much as they nearly in phase in others.
Also the data here are a bit spotty in demonstrating cause & effect. We’d want GDP trend data. And frankly unless we can succinctly key solar cycles to seasonal variations (crop levels and/or heating fuel use), to GDP to the DJIA, we have a pretty weak case.
It makes some sense that agrarian societies would be keyed on significant solar minima due to general changes in climate, but those are different from the typical 11-year solar cycle.
The only trends that really matter are the long-term trends, and on that note, did anyone notice that Keenlyside released another paper that further explicates a continued 10-year plateau/cooling in global temperatures? He’s now blaming the concordance of the PDO with the AMO (or MAO) or something. After that the paper concludes that temperatures will then shoot up to play catch up with all that extra, new & clumpy CO2 added since 1999 ^H^H^H^H 1985.
(for you young’un’s who never worked on ASCII greenscreen *nix & VMS terminals, ^H was a backspace… however on some misconfigured terminals the ^H actual data on the host would be stored as a “^H” character pair with the previous data unredacted … which lead to sometimes embarrassing moments in memo writing)
Heraclitus,
Kom,
Interesting remarks, indeed. There is somewhere – haven’t the link anymore –
a work, found on the economic branch of a university in Europe, where they compared
wheat prices in England and solar cycles since 1260.
Re: DJIA and solar cycles, it’s not that easy: When looking, sometimes there is a trough – on high level – at solar cycle peak (exhaustion?). Because, the best DJIA increases are
on strong solar cycle up phases (beginning 1/3 of whole cycle).
Too, it may count, if we are in a more financial oriented cycle,
or a more commodities oriented cycle.
The crash of ’29 was pretty near the solar cycle peak then (Using 12 month centered mean).
Same to the 2000 peak.
The top of Gold and Silver in ’80 was pretty near to that peak (again using 12 month centered means)
The cra
dow jones and CO2 emissions I made a new graph
http://home.casema.nl/errenwijlens/co2/dji_emis.gif
see my dutch blog
http://klimaathype.volkskrantblog.nl/
The Great Wave, David Hackett Fischer, Oxford University Press, 1996, has some relevant material. On page 50 of the book (linked below) is an interesting graph gleaned from James Thorold Rogers’ price series, as it appeared in Rogers’ History of Agricultural Prices in England
http://books.google.com/books?id=-efB6GTgNdAC&pg=PA265&lpg=PA265&dq=crisis+of+the+14th+century+fischer&source=web&ots=xn8LoZMgbA&sig=d9x6tFA08lzLle14MCVugspJWOo&hl=en&sa=X&oi=book_result&resnum=1&ct=result#PPA36,M1
Fischer himself does not make the link to solar cycles. In fact, he issues the following caveate to readers in his introduction: “…the movements we are studying are waves – not cycles. To repeat: not cycles, but waves.”
Fischer is mostly concerned with four major waves of economic history. I am chiefly interested in one of these, the Medieval price revolution, which commenced circa 1180 to 1230, with surging populations, greater personal wealth, ascendancy of great political and military forces, and building projects, such as Cathedrals. Much of the source material he has assembled to support his “waves” theory recreates the grain harvests of the periods.
The graph on p. 50 shows departures of wheat prices from the decenial mean, between the years of 1260 to 1356, during the so-called Wolf Solar Minimum, and it is striking. For about 100 years, there are alternating negative and positive price excursions, with a complete cycle completed every 10 – 12 years. In other words, grain prices spiked every 10 – 12 years. The excursions from the mean grew higher and higher, til, around 1316 – 17, when they reached about 200% of the price averages of the previous 50 years.
I’m no statistician, but I’ve watched enough of the CA demonstrations to see that a “cyclical” (or any other) appearance can be an “artifact” of its creator or manner of creation. Perhaps someone better at this than I can point out whether in this case, the business of decennial averaging manufactures this tendency.
What I do know, is the historical evidence of a climatic downturn that “peaked” around this time. Sir William Chester Jordan, in his The Great Famine, characterizes the unremittingly bad weather – cold, wet and raining at all the right times to prevent in subsistence planting, and the ensuing period when “no bird could be heard to sing”. There are many other references to the cold of the Wolf minimum, and its catastrophic effects on Europe.
Bill P.
fond some of the data again, here:
… look for “Prices and Wages in London & Southern England 1259-1914
and paper “Influence of Solar Activity on State of Wheat Market in Meadieval England”
From: http://en.wikipedia.org/wiki/William_Stanley_Jevons
In a relatively minor work, “Commercial Crises and Sun Spots”,[4] Jevons analyzed business cycles, proposing that crises in the economy might not be random events, but might be based on discernible prior causes. To clarify the concept, he presented a statistical study relating business cycles with sunspots. His reasoning was that sunspots affected the weather, which, in turn, affected crops. Crops changes could then be expected to cause economic changes.
-end quote
This is the same Jevons of Jevons Paradox – he found that increases in coal use efficiency resulted in MORE coal being used, not less. Something I point out to folks when they say we can cut back our oil usage by using more efficient cars…
Also from the wiki:
In The Coal Question, Jevons covered a breadth of concepts on energy depletion that have recently been revisited by writers covering the subject of peak oil. For example, Jevons explained that improving energy efficiency typically reduced energy costs and thereby increased rather than decreased energy use, an effect now known as Jevons paradox.
-end quote
So it would seem that energy policy, weather cycles, sunspots, and economic performance have been seen as linked for quite some time…
FWIW, Jevons invented a ‘logic piano’, an early form of mechanical computer. He took the very long colonial records of grain production in India and correlated it with the sun spot cycles. He didn’t just make up an idea, he started from the data and looked for a correlation. One only hopes he didn’t do it with a ‘logic piano model’ 😉
I find the sun spot / stock market correlation to be very plausible. If everything gets a double dose of snow this year, you can bet that natural gas company stocks will be going up. A lot. (APA, XTO, CHK, UNG) If crops fail from cold and wet, watch DBA and JJG along with ADM. And don’t forget the cold remedies from MRK, PFE, JNJ, et. al. Who sells snow plows and road salt? 😉 Oh, and don’t forget MTN for the ski business. But I’d steer clear of the insurance companies (due to losses…) and the swim suit makers. And beer makers would have to pay more for barley! Damn!
From a slightly more shamanic than scientific perspective – there is a parallel between some thinking on climate change and this discussion on cycles of human mental activity – both carry orthodox assumptions about the ‘internal’ nature of changes – in climate, ocean cycles according to the orthodox, are internally generated variability (not connected to solar cycles – despite the wealth of studies suggesting a link); similarly, few observers consider human consciousness as other than ‘internal’ either to individual humans, or to the ‘Earth’ as a collective phenomenon (but still constrained to humans). Very few explorers of the nature of consciousness (outside of the realms of science) would agree with that separation (yogis, shamans, astrologers) and if scientists could really take on the implications of modern physics – they would look much further afield for the origins of the cycles and evolution in human consciousness – realising that at the deeper levels of reality that consciousness inhabits, distance and time are illusions of the measuring mind. The sun is closer than we think.
Now there’s an age-old human paradox:
If mankind feels colder this year, is it really colder if the thermometer says otherwise?