Prediction markets are increasingly pricing in the risk of a recession in the US. Currently, traders give this scenario about 40%.
This is largely related to oil. Tensions between the US, Israel, and Iran have intensified, and the market reacted quickly. The price per barrel rose above $100 for the first time in almost four years.
On Polymarket, the probability of a recession by the end of 2026 is now about 32%.
This market is tied to official US statistics. The scenario is considered fulfilled if real GDP falls for two consecutive quarters. Such data is published by the Bureau of Economic Analysis.
There is another option. The bet will work if the National Bureau of Economic Research officially declares a recession.
Similar figures are shown by the Kalshi platform. There, the probability of a recession in 2026 is now about 32.5%. In recent weeks, this figure has increased significantly.
Probability of a recession in the US in 2026. Source: Kalshi
Oil prices surged after the escalation of the conflict between the US, Israel, and Iran. The price per barrel again rose above $100. This happened for the first time in almost four years.
One of the reasons was the closure of the Strait of Hormuz and reduced production by some Middle Eastern producers.
About 20% of the world’s oil passes through this strait. Therefore, any disruptions are quickly reflected in the market.
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A former White House energy adviser told CNBC that a prolonged blockade of the Strait of Hormuz would be a heavy blow to the global economy. In his view, in such a case, talk of a recession would quickly intensify.
Wall Street Is Divided on the Recession Outlook
Ed Yardeni once again warned clients about risks to stocks after the spike in oil prices. He previously compared such a situation to the market downturn in the early 2000s.
Now he is talking about another risk: stagflation, as in the 1970s. Yardeni estimates this scenario at 15%. Previously, he did not consider it at all.
“The US economy and the stock market are now caught between Iran and a hard place,” Yardeni said.
In his opinion, rising oil prices will only complicate the Fed’s position. Inflation may go higher. The stock market also looks vulnerable in such a situation.
Peter Schiff takes a hard stance. He also links oil to recession risk and recalls the downturns of 1973–1974 and 1990. Back then, oil was one of the main blows to the economy.
JPMorgan CEO Jamie Dimon also allows for a recession in 2026. At the same time, the US economy was still showing growth in the second quarter of 2025. GDP then increased by 3.8%.
According to the bank, the probability of a negative scenario is about 35%. Against the backdrop of tensions in the Middle East, the market has already started to react. Shares of Ford, GM, and Stellantis fell, while gold continued to rise along with oil.
However, not everyone on Wall Street expects a downturn. Goldman Sachs previously forecast US real GDP growth of 2.6% in 2026. This is above the market’s average forecast—about 2.0%. The bank believes that investments in artificial intelligence could support the economy.
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At Morgan Stanley, a weaker start to the year is expected. According to their forecast, the economy may slow down in the first two quarters of 2026. After that, growth may accelerate in the second half of the year.
According to current estimates, the global economy could grow by about 3.2% in 2026.
Employment Data Increases Pressure
There are also worrying signals from the US labor market. In February, the economy lost 92,000 jobs. After that, unemployment rose to 4.4%.
There are now about 7.6 million people unemployed in the country. Among men, the rate is about 4.0%. For women, it is about 4.1%.
The situation is worst among teenagers. In this group, unemployment has already reached 14.9%.
The stock market reacted quickly. In early Monday trading, US index futures fell. Contracts on the S&P 500 dropped by about 1.4%.
