Why bad weather darkens a market forecast

A survey asks for a six-month outlook on the economy. Respondents polled on an overcast morning produce a lower figure than those polled the following day in sunshine. The economic data available to both groups is identical.

What everyone sees

Forecasters believe they are answering a question about data. They are also answering the question their body is in, and the body’s answer leaks into the number. The leak is not detected because the forecaster has no access to the counterfactual version of themselves under a different sky.

What is actually happening

Schwarz and Clore showed that respondents reported lower life satisfaction on rainy days unless their attention was drawn to the weather, which eliminated the effect. Hirshleifer and Shumway found a small but significant positive correlation between morning sunshine and daily stock returns across multiple exchanges. The mechanism is misattribution of affect: a mood produced by one source is experienced as a judgement about something else, and the two are not distinguished unless the true source is made salient.

Why it stays hidden

The leak hides because mood has no label. The forecaster does not feel “pessimistic because of rain”; they feel pessimistic, period, and the content of the question supplies a reason the mood can attach to. Schwarz and Clore showed that a simple prompt — asking about the weather first — is enough to break the link, which confirms that the link depends on the source going unnoticed.