Prediction markets don’t see the U.S. slipping into a recession this year, as Federal Reserve Chair Kevin Warsh said Wednesday, saying the economy is “strong” and heading in the right direction.
Warsh Believes that Economy Is in Good Shape
At the FOMC press conference, Warsh said productivity has been “moving higher” for the past couple of years, even though it is difficult to measure precisely.
“Broadly, what I heard in the room the last couple of days is consistent with my own views, which is that the economy is strong,” he added. “The economy is pointing in the right direction.”
Warsh, however, declined to link economic growth to inflation, saying the Fed’s goal is to build a more durable economy that lasts longer while maintaining stable prices.
No Economic Contraction Expected
The betting crowd on Polygon (CRYPTO: POL)-based Polymarket sees only a 7% chance of recession this year, down sharply from the yearly high of 37% in March. The odds of a recession in 2027 were significantly higher, at 35%.
To resolve the outcome to “Yes,” the economy must record negative growth for two straight quarters.
The economy grew in the first two quarters of 2026, with the advance GDP estimate for the third quarter set to be published on Friday.
Will Fed Hike Rates in December?
The Fed held rates at 3.75%-4%, even though two officials dissented in favor of a hike. At the press conference, Warsh refused to commit to a December increase.
The Fed Chair said information received over the coming period will help the central bank “determine” where it wants policy to be.
Market participants, however, are pricing in a 78% chance of a hike to the 4.00%-4.25% range, according to the CME FedWatch tool.
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