Can you bet on a US recession? Many Americans are doing just that and here’s how it works

Earlier this week, warnings that the US had already entered or would soon enter a recession were being heard from some of Wall Street’s leading figures. BlackRock CEO Larry Fink told The New York Economic Club on Tuesday that many of his contacts were worried that the US economy had already slipped into a recession. At the same time, JP Morgan Chase’s CEO Jamie Dimon increased the chance of a recession within the next year.

Some investors might argue that now that President Donald Trump has reversed course on his plans to impose punitive tariffs on some of the country’s largest trading partners, the economy might evade a recession. However, with 10 percent tariffs in effect on nearly all major trading partners, 25 percent tariffs on imports from China, as well as 25 percent duties on imports from Canada and Mexico (on goods excluded from the US-Mexico-Canada Trade Agreement), and on steel and aluminum imports, a slowdown in the economy could still lead to a recession. Additionally, consumer sentiment and confidence in the market have reached record lows, with many households planning to reduce their spending in case of a recession, which their lack of confidence in the economy could help bring on.

What is a recession?

Typically, an economy is said to be in a recession after two consecutive quarters of decreases in GDP growth. When Larry Fink says that the economy could already be in a recession, he is alluding to the fact that the administration’s policies may have set the economy on track to deliver a recession, even if economists don’t yet have the data in their hands. In all likelihood, figures that show two consecutive quarters of decreases in GDP will not be available for months.

How low consumer confidence can lead to a recession

When consumers aren’t confident about the future of the economy, they typically try to increase their savings to position themselves for a rainy day. But, as they begin to cut back on their spending, companies take in less revenue and may turn to lay off workers to maintain their profit margins or reduce the hit. As unemployment increases, spending continues to decrease as aggregate demand falls, creating a vicious cycle that can lead the economy into a recession.

Investors take bets on the possibility of a recession in the US

As the number of people who believe that the economy is heading towards a recession rises, some betting sites like Polymarket are allowing bets to be placed on whether the US economy will see an economic downturn amounting to a recession in 2025.

Currently, on Polymarket, about 50 percent of bettors believe a recession will take place in 2025, and a total of $2.2 million has been gambled on the site. Polymarket allows for a simple ‘yes’ or ‘no’ bid to be made on questions related to economics, politics, sports, and much more. However, the site prohibits bets from investors in the US.

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