Is a 2024 US Recession Inevitable? Insights from Polymarket and Analysts

Polymarket and the CME’s Fedwatch tool indicate a high probability of a rate cut during the upcoming Federal Open Market Committee (FOMC) meeting in September. However, Garry Evans, chief asset allocation strategist at BCA Research, asserts that even with these cuts, a U.S. recession may still be unavoidable. Interestingly, Polymarket bettors currently assign only a 10% chance of a recession occurring in 2024.

September FOMC Rate Cut Likely, but Recession Fears Persist

The Federal Reserve is likely to reduce the federal funds rate at the September FOMC meeting, with a 76% chance of a 25 basis points cut according to CME’s Fedwatch tool. Despite this, Evans argues that such measures will not prevent an impending recession.

In a recent CNBC interview, Evans stated:

"Every single one of us now believes there’s a recession, and that’s exactly the opposite of what the market believes. There’s a very strong narrative out to the market that we’re facing a soft landing. We don’t believe that. We see signs that the economy is turning down."

Indicators like the Sahm Rule, known for its accuracy in predicting recessions, are beginning to signal trouble. Evans is not alone in his concerns; there is a growing chorus of voices warning about a potential economic downturn.

This week, renowned author Robert Kiyosaki expressed concerns about the U.S. economy on social media, while Peter Schiff has echoed similar warnings, predicting a crisis for the U.S. dollar and a looming economic collapse.

Despite these warnings, Polymarket bettors remain skeptical about a recession this year. A wager of $205,491 is currently on the table, set to expire on Dec. 31, 2024, which stipulates that the market will resolve to ‘Yes’ if the Bureau of Economic Analysis reports two consecutive quarters of negative GDP growth in 2024. Yet, bettors are only placing the odds of this scenario at 10%.

What do you think about the BCA Research strategist’s perspective and the Polymarket recession bet? Share your thoughts in the comments below.