Probability of a US recession in 2024 reaches historic low on prediction markets

After months of uncertainty about the possible onset of a recession in the United States, market sentiment now suggests a turnaround and economic stability is expected for the remainder of 2024.

In this case, the probability of a recession in 2024, based on the possible economic outlook highlighted on the prediction market, has fallen sharply in recent weeks. Data from the forecast platform Polymarket shows that the probability of an economic downturn on September 9, 2024 has fallen to an all-time low of 7%.

The percentage peaked on August 5, when it was 30%. The bet, which expires on December 31, 2024, has a stake of almost $245,000.

The recession will occur if the US experiences two consecutive quarters of negative gross domestic product (GDP) growth in 2024. In fact, the likelihood of a downturn has declined, although there were signs of weakness due to disappointing employment data for August.

In fact, the data pointed to a possible rate cut by the Federal Reserve in September, with markets uncertain about the exact amount. The institution is expected to cut the benchmark interest rate by 25 basis points.

In particular, part of the market believes that the interest rate will reduce the possibility of a recession. Some analysts believe that a slowdown is possible, but there is no consensus on the timing.

Analysts assess the US recession

Meanwhile, experts like economist Peter Schiff claim that a Fed rate cut will not stop the recession. In an X-post on September 10, Schiff said that the US could already be in a downturn based on economic developments, which is only waiting for official confirmation.

“The Fed's rate cuts will not prevent a recession. In fact, the U.S. economy has probably been in recession for some time, even if it has not yet been officially confirmed. While short-term rates may fall, long-term rates and inflation will rise along with unemployment. The game is over,” he said.

At the same time, an economist with the pseudonym Market Maestro A September 4 X post noted that, based on historical patterns, the next recession could occur within the next 12 to 24 months following the recent yield curve inversion and possible Fed rate cuts, putting the next market downturn on target for 2025 at the latest.

However, he noted that there remains a strong chance that markets could experience a soft landing if conditions stabilize or Fed policy effectively mitigates the risks of an economic slowdown.

Henrik Zeberg, on the other hand, has claimed that investors should expect a recession, which he believes is guaranteed. In his previous market outlook, the macroeconomist predicted that both the stock and cryptocurrency markets would see a significant pre-recession rally before crashing, claiming that the Fed was coming too late to the rescue.

After a disastrous first week of September, stocks and cryptocurrencies are showing short-term uptrends, fueling optimism that the situation will stabilize. In summary, the likelihood of a recession now depends on the impact of the Fed's upcoming rate cut.

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