Beyond an avenue for making speculative bets, prediction markets can offer an additional glimpse into the prevailing sentiment surrounding a particular matter.
You wouldn’t have to look particularly far to see that worries surrounding a potential recession in the United States have skyrocketed as of late. President Trump’s sudden imposition of previously-announced tariffs on China, Mexico, and Canada on March 3 caused a crash in the cryptocurrency market, as well as a general selloff of risk assets.
Prediction markets reacted accordingly. On March 4, two of the most popular platforms — Kalshi and Polymarket, marked a noted uptick in users who answered affirmatively to the query of whether or not a recession will occur this year.
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Prediction markets show increased odds of a recession
Over the course of March 4, international prediction betting market platform Polymarket saw the odds of a recession in 2025 happening increase from 27% to 44% — although by press time, the odds had retreated to 39%.
A similar increase was also seen on domestic platform Kalshi — where the odds of a recession increased from 33% to 43% over the course of the day.
There is an important distinction to be made here. Prediction markets are not representative of the wider population. To boot, the very odds offered by these platforms are made with profit in mind — rather than presenting an actual look at the likelihood of a certain outcome.
In addition, deploying capital on a large scale can tilt the odds — as seen with the sudden decreases and increases in odds these platforms saw when it came to the United States presidential election, only for it to turn out that millions of dollars were put up by a small number of accounts.
With all of that mind, however, these recent swings are almost certainly organic, and showcase a growing sentiment that the Trump administration’s policies could lead to a contraction of the economy or a marked slowdown and resurgent inflation by the end of the year.
Featured image via Shutterstock
