Betting odds of a recession this year reached an all-time low on Friday, following a resurgence in the stock market amid the Trump administration’s ceasefire talks with Iran and recent data pointing to an economy that appears to be more resilient than expected.
Stocks reached all-time highs as the labor market appeared to stabilize, despite stubborn inflation.
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Odds of a recession by the end of 2026 dropped from 40% to 17% on Kalshi as of Friday, a record low for the oddsmaker, while odds also dropped on competitor Polymarket, falling to as low as 23%, the lowest level since early March.
A recession is signaled by two consecutive quarters of negative growth in gross domestic product, a measurement of goods and services produced in a country.
U.S. GDP grew at a 2% annualized rate through the first quarter this year, the Bureau of Economic Analysis reported Thursday, a sharp rebound from the revised-down 0.5% growth to end 2025 and a reversal from potentially negative economic growth.
Bureau of Economic Analysis data indicated a recent surge in spending boosted the economy as tech firms poured in funding to develop AI infrastructure, with business spending growing by 10.4% in the latest quarter, up from 2.4% the previous quarter and the highest rate of growth since 2023.
The job market also showed signs of growth: The number of Americans filing for unemployment benefits fell to its lowest level since 1969 last week, and the number of people already receiving benefits dropped to its lowest level since April 2024.
The Dow Jones Industrial Average ended April up 7.1%, its strongest month since November 2024, while the S&P 500 soared 10.4% in its best month since November 2020 and the Nasdaq surged 15.3%, the index’s best month since April 2020, as each index recovered from a yearly low in March.
“This is still an AI-driven economy,” Olu Sonola, Fitch Ratings’ head of U.S. economics, wrote Thursday. “The longer the conflict with Iran drags on, the greater the risk that higher energy prices continue to push inflation up and ultimately dampen growth.”
$750 billion. That’s how much Amazon, Alphabet, Microsoft, Meta and Tesla projected in combined spending this year, with a majority of funds targeting AI chips, servers and data centers. Amazon committed up to $200 billion in capital expenditures for 2026, the largest single-year guidance from any U.S. company over the last decade.
Economists warned about the likelihood of a recession as a U.S. conflict with Iran resulted in soaring energy prices and inflation. Moody’s Analytics raised its odds for a recession to as high as 49% in March, as chief economist Mark Zandi said recession risks were “uncomfortably high and on the rise.” Wilmington Trust placed 45% odds, above 40% odds from EY-Parthenon, even as Goldman Sachs appeared more optimistic, lowering odds from 30% to 25% with expectations for solid economic growth. Recession fears appeared to fade by late March before the U.S. and Iran reached a ceasefire deal in early April, leading to declining oil prices.
ForbesBig Tech Is On Track To Spend $750 Billion On AI This YearForbesNew Unemployment Applications Plunge To Lowest Level Since 1969By Ty RoushForbesKey Inflation Meter Jumped Again During Iran War—As Consumer Prices Remain HighBy Ty Roush
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