The likelihood of a U.S. recession in 2025 has climbed to over 61%, according to traders on the Kalshi prediction market. This surge in pessimism follows a sweeping tariff policy enacted by President Donald Trump on April 2.
Kalshi bases its recession criteria on the standard definition—two consecutive quarters of negative GDP growth, as reported by the U.S. Department of Commerce.
The probability of a recession on Kalshi has nearly doubled since March 20 and is now closely aligned with Polymarket’s forecast, where the odds currently stand at 60%.
Economic sentiment has sharply declined in response to Trump’s executive action, which introduced a baseline 10% tariff on imports from all nations, along with varying “reciprocal” tariffs targeting trade partners that impose duties on American products.
The market reaction was swift and severe. U.S. equities plummeted, erasing over $5 trillion in value within days, as investors braced for a prolonged trade conflict. Market analysts now warn that the global economic fallout could depress risk assets such as cryptocurrencies and stocks for an extended period.
Despite mounting concern, Trump maintains that the tariffs will ultimately strengthen the U.S. economy and correct unfair trade practices. “The markets are going to boom,” he asserted on April 3, framing the ongoing sell-off as a necessary short-term adjustment.
Meanwhile, asset manager Anthony Pompliano suggested that the administration may be intentionally provoking a market downturn to force lower interest rates. He pointed to the sharp drop in 10-year Treasury yields—from 4.66% in January to 4.00% by April 5—as evidence of this strategy’s effectiveness.
Trump also took to Truth Social on April 4 to urge Federal Reserve Chair Jerome Powell to cut rates, declaring, “This would be a perfect time for Fed chairman Jerome Powell to cut interest rates.”
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