U.S. Recession Odds Surge to 65% Amid Economic Uncertainty

The likelihood of a U.S. recession in 2025 has surged to 65% on the blockchain-based prediction platform Polymarket. This elevated risk perception is fueled by a combination of factors, including the lingering effects of earlier interest rate hikes, shifts in trade policy, and weakening market conditions. Despite the Trump administration's announcement of a 90-day pause on new tariffs, the recession odds on Polymarket remain steadfast at 65%. This pause was intended to mitigate market volatility, but it has not been sufficient to alleviate concerns about an impending economic downturn.

The market defines a recession by the standard measure of two consecutive quarters of negative real GDP growth. The odds of a recession have been steadily climbing over recent weeks, reflecting growing concern among investors and analysts. At the start of the year, another prediction platform had placed recession odds at 18%. The shift in sentiment is tied to macroeconomic trends and recent policy moves. The Federal Reserve’s aggressive interest rate hikes over the past two years have slowed economic activity, particularly in rate-sensitive sectors such as housing and consumer spending. Additionally, concerns around recently announced U.S. tariffs on Chinese goods have added to market stress, though the implementation of these tariffs has been paused for 90 days.

Speculators on Polymarket now assign a 65% probability to a U.S. recession this year, up from 26% when President Donald Trump took office in January. These odds show a steady climb over the recent weeks with growing concern among investors and analysts. Further compounding the probability, Goldman Sachs has raised its recession forecast to 45%, up from 35%. On the same note, JPMorgan estimates 60%. Notably, UCLA economist Clement Bohr said a downturn could still be avoided if Trump’s policies are rolled out gradually.

The rising likelihood of a U.S. recession casts uncertainty over the cryptocurrency market, with major digital assets experiencing sharp declines and minor recoveries. Major digital assets saw sharp declines earlier in the week before recovering alongside broader markets following news of the tariff pause. Analysts say cryptocurrencies, often considered high-risk assets, tend to follow the performance of tech stocks during economic downturns. While some investors view digital currencies like Bitcoin as a hedge against traditional financial instability, the crypto market’s volatility may intensify if broader risk-off sentiment were to take hold again.