U.S. Recession Odds Rise Amid Tariff Concerns

According to Cointelegraph, traders on the Kalshi prediction market have placed the likelihood of a U.S. recession in 2025 at 61%, following a significant tariff order signed by U.S. President Donald Trump on April 2. The prediction market uses the standard definition of a recession, which involves two consecutive quarters of negative GDP growth, as reported by the U.S. Department of Commerce. The odds of a recession have nearly doubled since March 20 and align closely with the 60% probability on Polymarket, another prediction platform. The macroeconomic outlook for 2025 has worsened rapidly after President Trump's tariff order, which led to a sell-off in capital markets and raised concerns about a prolonged bear market. The executive order established a 10% baseline tariff rate for all countries, with varying "reciprocal" rates for trading partners with existing tariffs on U.S. imports. This announcement caused an immediate stock market decline, erasing over $5 trillion in shareholder value within days. Market analysts warn of a potential extended trade war that could negatively affect global markets and suppress risk asset prices, including cryptocurrencies. Despite these developments, President Trump remains optimistic, asserting that the tariffs will ultimately strengthen the U.S. economy and address trade imbalances. "The markets are going to boom," he stated on April 3, describing the current market downturn as a predictable phase of the process. Meanwhile, asset manager Anthony Pompliano speculated that President Trump may have intentionally triggered market declines to lower interest rates. He pointed to the reduction in 10-year U.S. Treasury bond yields, which fell from approximately 4.66% in January 2025 to 4.00% by April 5, as evidence of this strategy. President Trump has also urged Federal Reserve Chairman Jerome Powell to reduce short-term interest rates, suggesting in an April 4 Truth Social post that it would be an opportune moment for such a move.