Mikhail Gorbanev

January 2015

CAN SOLAR ACTIVITY INFLUENCE THE OCCURRENCE

OF RECESSIONS?

Outline

2

• What are the sunspots, solar cycles, and solar

maximums?

• Literature: Jevons and Chizhevsky

• Methodology: Series comparison; stacked cycles

• Findings: Recessions do occur more often around and

after solar maximums!

• Projections for the solar maximum of 2014

• Issues for discussion

What Are the Sunspots, Solar Cycles,

and Solar Maximums?

Solar activity fluctuates with approximate 11-year period known as the

“solar cycle”. The cycle is not exactly regular, and significant variations

have been observed over centuries.

The cycles can be measured by counting the “sunspots” on the sun

surface. Sunspots are temporary phenomena on the photosphere of the

sun that appear visibly as dark spots compared to surrounding regions.

The period of elevated solar activity with the highest number of sunspots

during the cycle is called “solar maximum”.

Around solar maximums, various types of solar activity reach their

maximums levels: radio activity, radiance, proton emission, solar wind,

flares, coronal mass ejections (CME), etc. 3

Impact on Earth

Physical impact: Disruptions of radio and telecommunications; fluctuations

in the geomagnetic field (“magnetic storms”); electromagnetic impulses in

power grids.“Carrington event” in 1859 . CME in mid-2012.

Human health hazard: Geomagnetic storms caused by solar activity can

affect people with cardiovascular health conditions and exacerbate

psychological and mental illnesses.

Jevons (1875-79): “Commercial crises” in Europe in the XIX century

occurred at intervals of 10-11 years, broadly matching the average solar

cycle length. “Beautiful coincidence“, link to bad harvests.

Chizhevsky (1924, 1938, 1976): A significant percent of revolutions and

“the most important historical events” occur in the three-year periods

around and after sunspot maximums. 4

Solar flare, radio flux and irradiance

fluctuate along with the sunspot cycle

5 Source: Wikipedia, http://en.wikipedia.org/wiki/Solar_cycle

Solar activity causes cyclical fluctuations

in the geomagnetic field

6 Source: NOAA, www.ngdc.noaa.gov/stp/geomag/apstar.html

For over 100 years, each solar maximum

overlapped with a recession in US economy

7

1415161718192021222324

-75 -60 -45 -30 -15 0 15 30 45 60 75 90 105

Sola

r cy

cles

Months into solar cycle

Figure 1. US Recession Starts in 1901-2014 (Solar cycles 14-24 centered on solar maximums)

Recession starts Single quarters of GDP contraction

Solar maximum

2-year period where

recessionsbegan each solar cycle

Sources: NBER; FRED; NASA; and author's calculations.

Since 1965, 3/5 of G7 recessions started in

3 years around and after solar maximums

8

20

21

22

23

24

-60 -30 0 30 60 90

Sola

r cy

cles

Months into the solar cycle

Figure 2. G7 Recession Starts in 1965-2014 (Solar cycles 20-24 centered on solar maximums. Larger markers

for months when recession began in two countries)

Solar

maximum3-year period where recessions most often began

Source: NBER; ECRI; NASA; and author's calculations.

Since 1933, US economy spent 1/3 of time in

recession in about 3 years after solar maximums

9

0.0

0.1

0.2

0.3

0.4

0.5

0.6

-50 -25 0 25 50 75

Ave

rage

of

US

rece

ssio

n m

on

ths

Months into solar cycle

Figure 5. Average of US Recession Months in 1933-2008 (Solar cycles 17-23, centered along solar maximums)

US was in

recession more often when not 1.5 years after the solar maximum

Solar maximum

Source: NBER; FRED; NASA; and author's calculations.

Since 1965, on average, 3 of G7 economies were

in recession 1-3 years after solar maximums

10

0.0

1.0

2.0

3.0

4.0

-50 -25 0 25 50 75

Ave

rage

of

rece

ssio

n m

on

ths

Months into solar cycle

Figure 6. Average of G7 Recession Months in 1965-2014(Solar cycles 20-24 centered along solar maximums)

On average, three of the G7 countries

were in recession 1-3 years after the

solar maximum

Solar

maximum

Cycle 24

Average

for cycles 20-23

Source: NBER; FRED; ECRI; NASA; and author's estimates.

The US business conditions deteriorate around

sunspot maximums ADS: Aruoba-Diebold-Scotti Business Conditions Index CLI: Composite Leading Indicator (compiled by OECD)

11

-5

-3

-1

1

3

0

100

200

300

400

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

All Five Sunspot Maximums Overlapped with Dips in the US Business Conditions in 1955 - 2012

(Smoothed with 25 months MA)

Sunspots, monthly (LHS) ADS CLI

Sources: OECD; Philadelphia FRB; NASA.

Entire OECD business conditions deteriorate too CLI: Composite Leading Indicator (compiled by OECD)

12

-5.0

-3.0

-1.0

1.0

3.0

0

100

200

300

400

1962

1967

1972

1977

1982

1987

1992

1997

2002

2007

2012

Figure 10. Solar Cycle and OECD CLI, 1962 - 2013(Smoothed with 25 months moving average)

Sunspots, monthly (LHS) CLI

Sources: OECD; NASA; author's calculations.

All four maximums of solar activity overlapped closely with troughs in the OECD business conditions

13

0

2

4

6

8

10

12

0

100

200

300

400

500

600

1945 1955 1965 1975 1985 1995 2005

Figure 13. Solar Cycle and US Unemployment, 1948-2014

All six solar maximums overlapped with minimums of the US unemployment rate followed by its sharp increase

Sunspots, monthly (LHS) US unemployment rate, percent (RHS)

Sources: US Bureau of Labor Statistics; FRED; NASA.

14

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

0

1000

2000

3000

4000

5000

6000

1950 1960 1970 1980 1990 2000 2010

Figure 15. Solar Cycle and G7 Unemployment, 1956-2014

All five solar maximums overlapped with minimums of unemployment rate in G7 countries followed by its sharp increase

Sunspots, annually (LHS)

Unemployment rate in G7 countries, percent (RHS)

Sources: OECD; IMF WEO; NASA.

15

4.0

6.0

8.0

10.0

-50 -25 0 25 50 75

Un

emp

loym

ent r

ate,

per

cen

t

Months into solar cycle

Figure 12. US Unemployment in 1954-2014

(Solar cycles 19-24 centered along solar maximum)

Maximum

unemploymentreached 3 years after the solar maximum

Solar maximum

Average for

cycles 19-23

Cycle 24

Source: US FED ; NASA; and author's calculations.

16

4.0

5.0

6.0

7.0

8.0

9.0

-6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7

Years into solar cycle

Figure 14. Unemployment in G7 Economies, 1964-2019

(Solar cycles 20-24 centered along solar maximum)

1964-2007 2008-19

2008

2014 (est.)

2019

(proj.)

2010

Average for

cycles 20-23

Solar

maximum

Source: IMF WEO; OECD; NASA; and author's calculations.

Cycle 24

17

-3.0

-1.0

1.0

3.0

5.0

-6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7

Perc

ent

Years into solar cycle

Figure 16. US GDP Growth in 1954-2014 (Solar cycles 19-24 centered along solar maximum)

Source: Bureau of Economic Analysis; IMF WEO ; NASA; and author's calculations.

Cycle 24

2009

2010

2014

(est.)

2019 (proj.)

Average for cycles

19-23

Trough for 3 years after the solar maximum

Solar maximum

18

0.0

2.0

4.0

6.0

-6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7

Perc

ent

Years into solar cycle

Figure 17. World GDP Growth in 1964-2014 (Solar cycles 20-24 centered along solar maximum)

2009

2010

2014

(est.)

2019

(proj.)

Cycle 24

Average

for cycles20-23

Source: IMF WEO ; NASA; and author's calculations.

Trough for 3 years after

the solar maximum

Solar

maximum

Issues for Discussion

19

Does it all make sense?

How to design statistical tests?

Use in economic models?

Any value for projections and policy

discussions?

According to NASA, the unfolding 24th solar

cycle reached its maximum in April 2014

20 Source: NASA, solarscience.msfc.nasa.gov/predict.shtml