US recession by end of 2026?

Prediction markets put the probability at 8%: US recession by end of 2026. Currently, markets see this as unlikely (8% YES). That warning should unsettle anyone watching Polymarket right now.

What’s Happening

The probability of a US recession by the end of 2026 on Polymarket has fallen sharply to 8% YES, a dramatic reversal from the 30% level recorded in mid-April and the 35% peak seen in late December 2025. This shift reflects a rapid repricing of macroeconomic risk following the release of stronger-than-expected employment data for May 2026, which showed nonfarm payrolls adding 214,000 jobs against a consensus forecast of 160,000. The contract, which has seen over $1.3 million in total volume, now implies that market participants view a contraction before January 2027 as a tail risk rather than a base case, a stark contrast to the 49% probability Moody's Analytics assigned to a recession in its March model amid escalating geopolitical tensions [Forbes, Apr 14][Euronews, Mar 18].

The current 8% probability stands in direct opposition to several prominent institutional forecasts. Economist Gary Shilling reiterated in early May that a US recession is "almost inevitable" by year-end, citing a frozen housing market, elevated corporate investment indicators, and a weakening consumer base, while also warning of a potential 20-30% stock market correction driven by historically high price-to-sales and price-to-book ratios on the S&P 500 [Business Insider, May 2]. JPMorgan's year-ahead outlook had placed the odds of a US recession at 35%, while Goldman Sachs matched the earlier Polymarket consensus at 30%. The divergence between the prediction market's current pricing and these sell-side estimates suggests that either the crowd is pricing in a rapid disinflationary path or that institutional models are lagging the most recent data points on consumer spending and the Philadelphia Fed's Survey of Professional Forecasters [Investopedia, Dec 31][Fox Business, May 5].

Looking ahead, the key catalyst for the contract will be the June 10, 2026 Federal Reserve policy decision and the accompanying Summary of Economic Projections. The yield curve has re-steepened in recent weeks, with the 2s10s spread now at +42 basis points, a level historically inconsistent with imminent recession risk. However, the University of Michigan consumer sentiment index remains depressed at 62.4, and the May CPI reading, scheduled for release on June 12, will be critical; a print above 3.1% year-over-year would likely force the Fed to maintain its restrictive stance, potentially reviving recession odds. The market's current 8% pricing implies a soft landing is the overwhelming base case, but the wide dispersion between the

Traded on Polymarket — $1.7M Volume