A wave of optimism has washed over Polymarket, a prediction market platform, with bettors significantly reducing their odds of a recession in 2024. The latest data shows a dramatic shift in sentiment, with the market now estimating only a 7% chance of an economic downturn this year, a substantial decrease from the 32% chance at the beginning of August. This decline in recession probability is evident in the Polymarket chart, which shows a steady downward trend from early August to August 15th. This bullish outlook is further bolstered by a staggering $158,294 wagered on the outcome, with odds favoring a “No” bet on a recession at 94 cents, compared to a mere 7 cents for a “Yes” bet.
This positive sentiment from Polymarket participants aligns with recent encouraging economic indicators. The U.S. Census Bureau reported a surge in July retail sales, up 1.0% month-over-month, significantly exceeding the estimated 0.4% and the previous month’s stagnant performance. Core retail sales also demonstrated robust growth at 0.4%, surpassing expectations. These figures suggest a healthy consumer spending environment, a key driver of economic activity.
However, despite the optimism reflected in Polymarket bets and retail data, the Federal Reserve remains cautious. St. Louis Fed President Alberto Musalem recently hinted at a potential policy shift, noting that the labor market is no longer overheated and that inflation risks have decreased. This sentiment is echoed in various market indicators tracked by Goldman Sachs, generally showing low recession probabilities across different metrics.
While recent data points to economic resilience, economists remain aware of historical patterns where recessions sometimes follow periods of apparent economic strength. Therefore, they remain vigilant, closely monitoring economic data for any potential shifts in trends. The combination of Polymarket’s low recession odds and robust retail sales figures presents a positive picture of the economy’s current state. However, inflation concerns persist, keeping Federal Reserve policymakers on alert as they continue to closely monitor economic data.
As 2025 approaches, market participants, policymakers, and economists will be watching closely for any changes in these trends. While Polymarket bettors and recent data suggest a positive outlook, the economic landscape remains dynamic, and the situation could evolve as new information emerges.
