Odds of a 2025 recession have been creeping up since the end of February. On Feb. 24, recession odds sat at 24% and began increasing the next day when a consumer confidence survey showed a third consecutive confidence decrease. Untamed inflation and tariffs will both increase consumer prices, adding to consumer anxiety.
Kalshi’s recession market wasn’t the only one that moved in reaction to Trump’s tariffs. The platform’s market on whether Trump will impose “large” tariffs in his first year increased from 67% to 75% from Monday to Tuesday. (According to Kalshi’s terms, “large” means an average 6% weighted tariff by Q4 2025.)
GDP forecast drops too
Kalshi’s U.S. GDP growth market is another forecast that has declined since the end of February. On Feb. 27, Kalshi predicted 2.4% GDP growth. That outlook fell to 0.5% on March 4.
Trump’s political approach reflects his approach to business. He hopes to extract favorable terms even from allies like Canada, which has a long history of economic and military cooperation with the United States.
Led by this ideology, Trump is more focused on flexing American strength even if it undermines other metrics he cares about, like stock market prices and economic growth. What’s new is that Trump’s words not only affect the stock market. He also moves multiple prediction markets at a time, giving traders many ways to hedge against the impacts of Trump’s words and actions.
