Forecasting the Weather, Forecasting Confidence in the
Economy
Scientific weather forecasting was a phenomenal new discovery of the mid-
nineteenth century. The science advanced shortly after two important inventions
of the 1840s: the telegraph, which transmitted information about weather
conditions in dispersed locations, and the practical barograph, which created a
time-series plot of changes in air pressure. People were impressed by the new
weather forecasts, which had (and continue to have) great scientific appeal. For
example, in one famous story about the Crimean War, scientists in November
1854 concluded that two apparently separate storms were in fact one storm,
enabling them to establish its trajectory and provide a forecast that saved the
British and French fleets from destruction.8
Weather forecasting stimulated people’s imagination as to what modern
science could achieve. By the 1890s, newspapers routinely published weather
forecasts daily. Such repetition ensures the strong epidemic potential of
meteorology narratives. These narratives also suggest an analogy to economic
forecasting: changes in public confidence seem analogous to shifting winds or
air pressure. Indeed, people will say that recovery, pessimism, or some other
inclination “is in the air.” It seems natural for people to think that if the
meteorologists can forecast the winds, then economists should be able to forecast
recessions.
To the extent that the public believes economic forecasts of booms or
recessions, there may be an element of self-fulfilling prophecy in the economic
forecasts. People hear economists’ pronouncements that a recession is imminent
and thus postpone activities that might stimulate the economy. Conversely,
because these scientists/economists note that past recessions have always ended,
people may come to expect any given recession to end. Suppose, by analogy,
that weather forecasters everywhere say that they have information to indicate
that a certain region is in danger of bad storms, and that the danger from such
storms typically lasts six months. People might therefore cancel many activities
for six months, and economic activity might fall for six months. With economic
forecasts of a recession, people might observe other people decrease their
spending after the warning and take that as evidence of a storm of lost
confidence.

The idea that economic fluctuations tend to repeat themselves follows an
older scientific tradition that has had a prominent place in modern culture. For
example, astronomer Edmund Halley noted in the year 1682 that comets
sometimes appeared at intervals of 75.3 years. He hypothesized that the same
comet was returning again and again, and he predicted it would be visible from
Earth again in 1758. Halley was proven right, and to this day Halley’s comet
returns every 75.3 years, though the comet has faded so much that in its latest
arrival in 1985–86 it was almost invisible. The story of Halley’s comet is a great
one that remains vivid in the popular memory. A constellation of narratives is
now built around it, such as the story that Mark Twain, born in a Halley’s comet
year, predicted his own death 75 years later when Halley’s comet returned again.
The earliest ProQuest News & Newspapers mention of the business cycle
came during the depression of 1858, and it appeared alongside a reference to
weather:
Some, claiming to be learned in meteorology, say the seasons ran in decades:
it seems also that there is a sort of business cycle of the same length of time;
and it happens very fortunately that the decimal panic comes at the same time
with the mildest winter. Whether this is a coincidence or a providence, or
whether it is a fact at all, I leave for others to decide.9
The idea that business fluctuations are a repetitive cyclical event with a
wavelength of a decade, or any other identifiable fixed interval, has become less
popular with economists, but the narrative that recessions and drops in
confidence are somewhat periodic and forecastable remains entrenched in
popular thinking.
Weather forecasting also inspired the idea that there ought to be statistically
documented leading indicators of future economic fluctuations. Within a decade
after the 1929 stock market crash that preceded the Great Depression, Wesley C.
Mitchell and Arthur F. Burns in 1938 pioneered the leading indicators approach
to economic forecasting, which encourages people to move into precautionary
mode in their economic decision making after a decline in the stock market, thus
possibly creating the very recession that was forecast.10 Leading indicators today
include the Department of Commerce’s Business Conditions Developments (now
melded into the Survey of Current Business), the Conference Board’s Composite
Index of Leading Indicators, and the OECD’s Composite Leading Indicators. A

ProQuest or Ngrams search for the term leading indicators shows that the idea
has undergone a long slow epidemic starting around the 1930s and is still going
strong.