Kalshi predicts 61% chance of US recession in 2025

Traders on the Kalshi prediction market have placed the odds of a U.S. recession in 2025 at 61%, following President Donald Trump’s sweeping tariff order issued on April 2.

The executive order established a baseline tariff rate of 10% on all imports and introduced reciprocal tariffs targeting nations with existing levies on U.S. goods.

This move has sparked fears of a prolonged trade war, leading to significant market turmoil.

Kalshi defines a recession using the standard criteria of two consecutive quarters of negative GDP growth, as reported by the U.S. Department of Commerce.

The recession probability on Kalshi has nearly doubled since March 20, mirroring similar forecasts on Polymarket, where traders estimate a 60% likelihood of economic contraction in 2025.

The macroeconomic outlook for 2025 worsened sharply after Trump’s announcement, triggering a massive sell-off in financial markets.

Over $5 trillion in shareholder value was wiped out within days, with major indices like the Dow Jones and Nasdaq suffering steep declines.

Economists warn that the tariffs could exacerbate inflation and slow economic growth, further increasing recession risks.

President Trump, however, remains optimistic about the long-term impact of his policies.

“The markets are going to boom,” Trump said on April 3, describing the current market downturn as a necessary adjustment to achieve economic independence.

Despite this confidence, analysts are concerned about the broader implications of retaliatory measures from trading partners such as China and Canada.

These counter-tariffs could affect $330 billion worth of U.S. exports and reduce GDP by an estimated 0.1% in 2025.

Interest rates have also come under scrutiny, with yields on 10-year Treasury bonds dropping from 4.66% in January to 4.00% by early April.

Some speculate that Trump’s tariff strategy aims to pressure the Federal Reserve into lowering rates further.