Brace Yourself: U.S. Recession May Be Closer Than Your Last Package Delivery 🚚!

by

What to know:

  • In a plot twist worthy of a less-than-stellar sci-fi novel, President Trump’s latest tariffs are making everyone in the U.S. clutch their pearls with concern about an economic downturn.
  • Prediction markets (which sound suspiciously like a futuristic betting game) Polymarket and Kalshi are now citing a gloomy 50% chance that we’ll be waving goodbye to economic stability.
  • We’re also on the brink of what could be a rather anxiety-inducing inflation and a spat of global trade tensions, so that’s something to chew on while sipping your morning coffee.
  • While some so-called “experts” suggest we might just see a lamentable slowdown instead of a full-blown recession, we’re left with a glimmer of hope for those elusive Federal Reserve rate cuts. Fingers crossed! 🤞

Ah, the sweet scent of recession fears wafting through the air like a delightful, albeit unwelcome, bouquet in a local garden. As President Donald Trump rolls out his nifty tariff plan, the prediction platforms are doing their merry little dance, signaling that the economy might just be headed for a rather grisly affair.

On the wonderfully chaotic Polymarket, a decentralized gambling haven for the economically inclined, the odds of America tripping into a recession have sneakily climbed above 50%—a milestone that feels less like a trophy and more like that awkward family reunion nobody wants to attend. Shares for “Yes, we’re doomed” feverishly rocketed to over 50 cents from a humble 39 cents in under a day, a growth rate that would make your portfolio weep with envy.

This wildly speculative contract will proclaim “Yes” if the National Bureau of Economic Research (NBER) decides to ring the recession alarm before the year decides to pack up and leave on December 31. We just need a fancy double-header of economic contraction first, which sounds almost like a terrible economic sitcom.

Kalshi, bless their regulatory hearts, is also in on the action, raising their recession predictions for 2025 from comfy 40% to an alarming 54%. Well, good to know that hope springs eternal, doesn’t it?

Markets, in their typically premature wisdom, often react to rising recession odds by sending risky assets like Bitcoin (BTC) on a downward spiral—a bit like watching a roller coaster plummet in slow motion. As of the latest updates, the S&P 500 futures were having a bit of an existential crisis, trading 3% lower, while Bitcoin sat glumly at $83,100, down a moody 1.5% over just 24 hours.

The new tariffs, which could be considered President Trump’s latest “Get Rich Quick” scheme gone awry, impose a lovely 10% base rate on all imports, not to mention higher taxes on 60 less-than-stellar nations. China, being the guest star in this bizarre production, faces a whopping 34% levy, combined with an already staggering 20%, bringing its grand total to a jaw-dropping 54%. Mark your calendars for April 5 and April 9; tickets to economic upheaval are now on sale!

While the Trump administration believes that these tariffs will magically solve the pesky U.S. goods trade deficits, in reality, they might just be stirring the pot of inflation and global discontent. Yes, because nothing says “economic stability” like a full-blown global trade war, right? 🤷‍♂️

Risk-off to be short-lived?

But wait, hold onto your hats—some folks suggest that this tariff-induced turmoil might merely lead to a slowdown, preserving the delicate tissue of our economy from the full-on tear of recession.

“The looming threat of further tariff escalation is certainly a hot topic at parties,” said UBS in a blog post that feels more like a safety blanket than a strategy. “In our highly optimistic base case, despite a slash-and-burn tariff approach, we envision a spacious 2% growth for the year—because surely that could happen, right?”

As for the financial markets? Some contorted logic suggests that tariffs are surprisingly “dovish,” implying that our initial panic might merely be the prelude to a swinging reversal fueled by the warm and fuzzy expectation of Federal Reserve interest-rate cuts.

“Remember — tariffs are dovish, and big tariffs are very, very dovish,” proclaimed the ever-optimistic Joseph Wang, who seems to have found joy in a remarkably dark corner. He seems to think that while tariffs might contribute to inflation, they’re just fleeting annoyances, like that alarm clock that won’t stop ringing.

Meanwhile, the folks in charge of rates are already pricing in a higher likelihood that the Fed will cut borrowing costs come June, cranking up the proverbial easing cycle that began its descent last September, much to the bemusement of economists everywhere.

Read More

2025-04-03 11:17