The odds of the U.S. entering a recession in 2025 have plummeted sharply on prediction platforms, aided by a de-escalation in the U.S.-China trade conflict.
What happened: Wagers in favor of a contract titled "US recession in 2025?" dropped from a peak of 66% in early April to 39% currently on Polymarket, a Polygon POL/USD-based platform that allows users to bet using cryptocurrencies.
As of this writing, bookmakers have invested about $5.5 million on the bet. To resolve the outcome to “Yes,” the economy must record another quarter of negative growth or the National Bureau of Economic Research must declare a recession before January 1, 2026.
Similarly, recession odds on Kalshi, a federally authorized betting platform, were cut to 38% from 71%. Note that, unlike Kalshi, Polymarket is not available to U.S. residents due to regulatory restrictions.
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Why It Matters: Recession odds soared following President Donald Trump's so-called "Liberation Day," which placed sweeping tariffs on trade partners.
The measures sparked a tariff war with China, one of America's biggest trade partners, with the two countries engaging in a tit-for-tat battle for weeks.
However, things eased after the two economic giants announced a trade deal in Geneva following high-level talks earlier this month.
These odds were consistent with JPMorgan Chase’s projection that the U.S. would likely avoid a full-scale recession this year, although a slowdown was on the cards.
Photo Courtesy: Dilok Klaisataporn On Shutterstock.com
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