Updated May 12, 2026
Prediction markets currently put the probability of a U.S. recession before the end of 2026 in roughly the high-single digits to low teens. That is considerably lower than the recession fears seen earlier this year — but weakening job growth and continued disruption in the Strait of Hormuz mean the risk has not disappeared.
Recession fears surged earlier in 2026 as war in the Middle East disrupted energy supplies and pushed oil prices sharply higher. Since then, the U.S. economy has continued to grow, and recession odds on major prediction markets have fallen substantially.
As of August 11, 2026, Polymarket prices its “U.S. recession by end of 2026?” contract at approximately 11%, while Kalshi's “Recession this year?” market is around 7%.
That does not mean economists universally believe recession risk is only 7%–11%. Bank forecasts and economic models use different definitions and time horizons, so they should not be treated as directly interchangeable with prediction-market contracts.
Measure | Recession Probability | Forecast Horizon |
|---|---|---|
Polymarket | ~11% | By end of 2026 |
Kalshi | ~7% | 2026 GDP-based contract |
NY Fed yield-curve model | ~16% | 12 months ahead; June data |
Goldman Sachs | 30% | Next 12 months; May forecast |
JPMorgan | 35% | Calendar-year 2026 outlook |
Mark Zandi / Moody's Analytics | 40% | Next 12 months; May estimate |
The important caveat is that these numbers do not answer precisely the same question. The New York Fed model, for example, estimates recession probability 12 months ahead, while Polymarket and Kalshi use specific contract-resolution rules tied to events occurring during 2026.
Prediction-market recession odds have fallen sharply from their spring highs.
Polymarket currently assigns roughly an 11% probability to a U.S. recession by the end of 2026. The contract has generated approximately $1.7 million in trading volume since opening in September 2025.
Kalshi is even more optimistic. Its current 2026 recession market is trading at approximately 7% Yes, with more than $3.2 million in volume.
That represents a dramatic change from March.
Kalshi's recession probability climbed as high as 36.9% in late March, when oil-market disruption and uncertainty surrounding the Middle East conflict were dominating economic sentiment. By April 1, the market had already fallen back to 27.7%.
In other words, traders have moved from pricing roughly a one-in-three chance of recession at the spring peak to less than one-in-ten on Kalshi today.
The difference between Polymarket and Kalshi is not necessarily a market inefficiency.
Their contracts have different resolution rules.
Polymarket's contract resolves “Yes” if either:
That gives Polymarket two possible routes to a “Yes” outcome.
Kalshi's 2026 recession contract is narrower.
It resolves “Yes” if the U.S. records two consecutive quarters of negative real GDP growth during the applicable 2025–26 period, using Bureau of Economic Analysis data.
This distinction matters.
The NBER does not define a recession simply as two consecutive quarters of declining GDP. Its Business Cycle Dating Committee considers a broader range of indicators when determining whether economic activity has entered a significant and widespread decline.
As a result, Polymarket can theoretically resolve “Yes” in a scenario where the NBER declares a recession even if Kalshi's two-quarter GDP condition is never met.
That makes a modest difference between the two prices entirely plausible.
Prediction-market contracts generally trade between $0 and $1.
If a “Yes” contract costs $0.11, the market is effectively pricing the event at roughly an 11% implied probability.
If the outcome occurs and the contract resolves Yes, the winning share settles at $1. If it does not happen, the contract settles at $0.
Prices can move continuously as traders react to:
The appeal of prediction markets is that participants have money at risk, meaning prices aggregate the views of traders who have a financial incentive to update their positions when circumstances change.
That does not make prediction markets automatically correct.
Polymarket's recession contract has around $1.7 million in lifetime trading volume, while Kalshi's equivalent market has more than $3 million. Those are meaningful markets, but trading volume alone does not guarantee forecasting accuracy.
Bank forecasts paint a more cautious picture than today's prediction-market prices, but the comparisons require context.
Goldman Sachs economists were forecasting a 30% probability of a U.S. recession over the following 12 months as of May 8, 2026.
That is not the same as saying Goldman believes there is a 30% chance of recession specifically before December 31.
A 12-month forecast made in May extends into spring 2027.
J.P. Morgan Global Research entered 2026 with a 35% probability of a U.S. and global recession during 2026.
That estimate came from its December 2025 annual outlook, so it should be treated as a dated forecast rather than a live August probability.
J.P. Morgan has continued to describe the economy as vulnerable to shocks, particularly through the labor market and elevated energy prices, but recession was not its baseline scenario entering the year.
Moody's Analytics Chief Economist Mark Zandi put the probability of recession over the following 12 months at around 40% in May, describing the economy as unusually close to the edge compared with a normal expansion.
That was lower than the roughly 49% reading reported from a Moody's recession model in March, when economic uncertainty surrounding the Iran conflict was particularly elevated.
Again, these are 12-month recession estimates rather than direct substitutes for Polymarket's or Kalshi's 2026 contracts.
The New York Federal Reserve maintains a widely followed model based on the difference between the 10-year Treasury yield and the 3-month Treasury rate.
The model estimates the probability that the U.S. economy will be in recession approximately 12 months ahead.
It is important to note that the New York Fed explicitly says these probabilities are not official forecasts of the Federal Reserve Bank of New York, the Federal Reserve System or the FOMC.
The latest figure we could verify using data through June 2026 was approximately 16.1%, down substantially from the elevated readings seen during the long yield-curve inversion.
That is considerably higher than the current Kalshi recession price but still suggests that continued economic expansion is the more likely outcome.
One of the clearest reasons prediction-market recession probabilities have fallen is simple:
The U.S. economy is still growing.
The Bureau of Economic Analysis reported that real GDP increased at an annualized rate of:
Both quarters were positive.
That matters particularly for Kalshi because its recession contract requires two consecutive quarters of negative GDP growth.
For that contract to resolve Yes through the remaining GDP path, the economy would need to turn from positive growth into consecutive quarterly contractions before the relevant 2026 window closes.
The more positive quarters that accumulate, the narrower that path becomes.
GDP looks relatively reassuring.
The labor market looks less comfortable.
The July employment report showed that U.S. nonfarm payrolls fell by 23,000 jobs, the first monthly decline in five months. Economists surveyed by Reuters had expected an increase of around 80,000.
May and June payroll gains were also revised down by a combined 103,000 jobs.
The unemployment rate nevertheless fell from 4.2% to 4.1%, but that decline came partly because 264,000 people left the labor force. Labor-force participation fell to 61.4%, its lowest level in roughly five and a half years.
Average payroll growth over the latest three months was only around 20,000 jobs per month.
That does not prove that a recession is beginning.
Some economists believe seasonal distortions — particularly in local government education — exaggerated the weakness in July.
But it does mean the labor market is now a more important downside risk than it appeared to be earlier in the year.
Another major difference between May and August is that the disruption in the Strait of Hormuz cannot be described as brief.
Shipping traffic remains severely restricted.
On August 11, Reuters reported that only six vessels had passed through the strait on Monday, compared with a pre-war norm of roughly 130–140 vessels.
The disruption has created persistent uncertainty around global oil and energy supplies.
Brent crude was trading at approximately $87 per barrel on August 11, well below the levels above $100 reached earlier in the conflict but still carrying a considerable geopolitical risk premium.
This matters for recession risk because a prolonged energy shock works through several channels:
The current recession outlook therefore depends partly on whether the Strait of Hormuz disruption finally eases or becomes an entrenched feature of the second half of 2026.
The Federal Reserve is dealing with an unusual combination of slower job growth and persistent inflation pressure.
At its July 29 meeting, the FOMC kept the federal funds target range at 3.50%–3.75%.
Three members dissented and preferred a 25-basis-point increase, highlighting how concerned some policymakers remain about inflation.
The Fed said economic activity was still expanding at a solid pace but acknowledged that inflation remained elevated, partly because of energy-related supply shocks.
The weak July jobs report reduced market expectations for an immediate rate increase, illustrating the dilemma facing policymakers: weaker employment argues for patience, while elevated energy-driven inflation pushes in the opposite direction.
This is one of the most important variables to watch through the remainder of 2026.
The consumer remains an important buffer against recession.
The latest BEA data show that consumer spending contributed positively to Q2 economic growth, while personal consumption expenditures increased 0.3% in June.
That does not mean household finances are uniformly strong.
Higher energy costs, expensive borrowing and uneven income growth can gradually reduce discretionary spending even while headline consumption remains positive.
A sustained downturn in consumer spending combined with weaker employment would therefore represent a much more serious recession signal than either factor in isolation.
Prediction markets have one major advantage over traditional forecasts:
They update continuously.
A bank may formally publish a recession probability only periodically.
Prediction-market traders can react within minutes to:
That makes markets useful as a real-time gauge of sentiment.
The drawback is that prediction markets can also overreact.
Traders can chase momentum, respond emotionally to breaking news or trade in markets with limited liquidity.
And most importantly, the probability is only as meaningful as the contract rules.
Kalshi and Polymarket currently have different recession prices partly because they are not settling on exactly the same definition of recession.
An 11% recession probability does not mean recession is impossible.
It means traders currently see continued expansion as overwhelmingly more likely than a qualifying downturn before the contract expires.
Roughly speaking, an 11% market probability translates to about:
1 chance in 9
Kalshi's current 7% price is closer to:
1 chance in 14
Those are significantly lower than the one-in-three recession probabilities markets briefly reached in March.
But low probability is not the same as zero probability.
The path can change quickly if:
That is exactly why prediction-market prices are worth revisiting rather than treating a single number as a permanent forecast.
The current market pricing makes more sense when viewed through the actual contract rules.
The economy has already produced positive real GDP growth in both Q1 and Q2.
That makes consecutive negative quarters during the remaining 2026 window less likely, particularly for Kalshi's GDP-based contract.
At the same time, July's weak employment report increases the probability that conditions could deteriorate later.
In other words:
The economy has not entered recession, but some of the buffers protecting it are becoming thinner.
That combination can logically produce low recession odds while still generating considerable economic uncertainty.
Prediction markets currently put the probability of a qualifying U.S. recession during 2026 at roughly 7%–11%.
As of August 11, 2026:
Broader economic forecasts can be higher because they use different time horizons and definitions. Goldman Sachs' May forecast put 12-month recession risk at 30%, while J.P. Morgan's December 2025 outlook assigned a 35% probability to a U.S. recession in 2026.
The most accurate takeaway is therefore not that “economists think recession risk is 10%.”
It is that prediction markets currently see a 2026 recession as a relatively low-probability outcome, while several broader economic forecasts remain more cautious.