Link Between Economic Activity and Sunspots Confirmed
“Solar activity as measured by the number of sunspots also adds to the explanation of the probability of a recession.”
A Guest Post by Bill Meridian
Once again, scholastic research has confirmed the link between planetary activity and the economy here on earth.
In the Global Conference on Business and Finance Proceedings, Volume 7, Number 2, from 2012, there is an article linking changes in the economy to sunspots. Cees J. Prins wrote ‘Solar Activity and Economic Recessions: The Case Of The US.’
Direct and Indirect Influences on the Economy
The author concluded, “The probability of a recession taking place depends on many variables. When the interest rate spread between 10 years government bonds and 3 months Treasury Bills is negative a recession is imminent. Also stock prices can give valuable information with predicting power. Solar activity as measured by the number of sunspots also adds to the explanation of the probability of a recession. In the 3 models that are estimated for 6 time periods the number of sunspots is always very significant. The sun has direct and indirect influences on the economy. To the first category belong damages to electronic networks. The indirect effects are the influences on human emotions and in the end also to the economy.”
Forecasting Recessions with Sunspot Activity
In his work, Prins took several variables and determined their value in forecasting recessions. He began with the inverted yield curve (short-term rates higher than long-term rates) because it is well known that this situation has led to a recession each time it has occurred.
He added variables such as stock prices, the leading indicators of the OECD and The Conference Board, the gold price, the oil price, new building permits, new job creation, corporate rate spreads, long-term rate spreads, and sunspots.
The inverted yield curve, stock market returns, and sunspots were the consistent variables in economic forecasting.
In his words, “It is clear that the model has one interesting and significant long term variable: the number of sunspots.” And, “The number of sunspots, as an indication of the activity of the sun, appeared to be a highly significant variable in explanation of a recession during all the periods investigated.”
Sunspot Activity Leads The Pack
It is noteworthy that only one traditional variable, inverted rates, consistently exceeded sunspots as a forecasting tool. Sunspots led all of the other traditional tools.
About The Author
Our guest post is by Bill Meridian, a leading financial astrologer who is the editor of Cycles Research newsletter and the author of Planetary Stock Trading (4th edition) and The Predictive Power of Eclipse Paths.
You can learn more about Bill Meridian and his services and publications at http://billmeridian.com/