Market Odds of a U.S. Recession in 2025 Drop in Half Since May 

The likelihood of the United States entering a recession in 2025 has dropped significantly, according to the latest market data from prediction platform Polymarket, where recession odds have fallen to just 22%, marking a notable decline from earlier highs in April and May.

The chart, based on over $8 million in total volume, shows that recession fears surged between late March and mid-May, when the probability peaked above 60%. At the time, concerns over persistent inflation, weakening industrial output, and delays in Federal Reserve rate cuts fueled bearish sentiment. However, those expectations have since eased dramatically.

Since June, sentiment has steadily shifted, with traders now assigning a far lower probability to a full-scale economic contraction this year. The chance of a recession slid below 30% in mid-June, eventually reaching the current level of 22% as of early July.

Receding Risk Despite Lingering Macro Concerns

The declining odds reflect growing confidence in a soft-landing scenario, where the U.S. economy slows but avoids a technical recession. Strong labor market data, resilient consumer spending, and improving inflation prints have likely contributed to this optimism.

Still, the economic outlook remains mixed. Some sectors—particularly housing and manufacturing—have shown signs of strain. Yet the broader market appears to interpret recent policy shifts and earnings data as reasons for cautious optimism, rather than recession alarm.

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A Volatile First Half of the Year

The prediction market chart reveals how quickly sentiment has shifted. From under 10% odds in early January, fears rose sharply in March and April, climbing past 60%, only to reverse through June and early July. This highlights the uncertainty that has defined the macroeconomic environment in 2025 so far.

With the next Federal Reserve rate decision and Q3 earnings season approaching, traders and investors will continue to watch closely for signs of either a recovery or renewed risk of contraction.