Traders on the Kalshi prediction market estimate the likelihood of a U.S. recession occurring in 2025 at 61%, following the extensive tariff directive signed by President Donald Trump on April 2.
Kalshi employs the standard definition of a recession, which is characterized by two consecutive quarters of negative gross domestic product (GDP) growth, as reported by the U.S. Department of Commerce.
The odds of a recession on the platform have nearly doubled since March 20 and align closely with current predictions from another platform, where traders rate it at 60% for 2025.
The macroeconomic forecast for 2025 has significantly worsened following the tariff order from President Trump and the resulting downturn in capital markets, leading to concerns about a prolonged bear market.
Predicted chance of a U.S. recession in 2025 surpasses 60% on the Kalshi market.
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Trump’s executive action disrupts markets
The executive action from the U.S. President set a 10% baseline tariff rate for all countries, along with varying “reciprocal” tariff rates imposed on trading partners that already have tariffs on U.S. imports.
This announcement resulted in an immediate downturn, erasing over $5 trillion in market value within just a few days.
Concerns about a recession are rising as market analysts caution against a potentially drawn-out trade conflict that could hinder global markets and lower the prices of risk assets, including cryptocurrencies.
Nevertheless, President Trump remains optimistic that these tariffs will ultimately reinforce the U.S. economy in the long run and rectify any trade discrepancies.
“The markets are going to boom,” the President stated on April 3, framing the current financial downturn as part of an expected cycle.
Market sell-off continues, with stocks shedding trillions in value.
Asset manager Anthony Pompliano speculated that the President may have intentionally caused market turmoil to drive down interest rates.
Pompliano pointed to the decline in 10-year U.S. Treasury bond yields as evidence of a successful strategy to induce a recession for that purpose.
The interest rates on 10-year Treasury bonds fell from around 4.66% in January 2025 to just 4.00% by April 5. President Trump is also advocating for Federal Reserve Chairman Jerome Powell to reduce short-term rates.
“This would be the ideal time for Fed Chairman Jerome Powell to decrease interest rates,” Trump mentioned in an April 4 post.
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