Scan: GDP growth in 2026?

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GDP growth in 2026? — 0.0 or below

KXGDPYEAR-26-T0.1 · Economics · 2026-04-28

Agent

Market Price

+3.0%

Edge

60%

Confidence

Volume: 19,783

Spread: 0.2c

Days to resolution: 305

Markets in event: 14

Final Rationale

I ACCEPT challenges 1 and 2: my sq2 anchored too closely to the unconditional 15% base rate without properly conditioning on positive Q1 2026 nowcasts (+1.2-2.4%), no yield curve inversion, and healthy jobless claims — historically, years starting this way almost never end negative annually, and the arithmetic requires Q2-Q4 to average ~-2% annualized which is a 2008/2020-magnitude sustained contraction. I PARTIALLY ACCEPT challenge 3: the contrarian ensemble member did inflate my central estimate by conflating recession with annual-negative GDP. I PARTIALLY ACCEPT challenge 4: the liquid market's stability through Iran war news is genuinely informative, though I retain a modest premium above 5% because oil shocks plus tariffs plus weak Q4 carryover create real (if low) tail risk that I weight slightly higher than the market.

Price vs. prediction

How the market moved after the agent's call. Solid blue line is the actual market price; dashed line is the agent's static forecast at $t{=}0$.

$n = 59$ follow-ups

1. Planner Opus · Fermi decomposition + tool plan

Tools chosen: kalshi_data kalshi_orderbook fred_data article_search web_search wikipedia_lookup code_execution

Sub-questions (Fermi decomposition)

Will the US economy enter a recession (two consecutive quarters of negative GDP growth) at any point in 2026? (w=0.45)
Will full-year 2026 real GDP growth be negative even if only one or no quarters show negative growth (i.e., will weak quarters offset any strong ones to produce a negative annual figure)? (w=0.30)
Are current leading economic indicators (trade policy shocks, consumer sentiment, labor market, investment) consistent with a trajectory toward negative full-year 2026 GDP? (w=0.25)

Planner reasoning

This question asks whether full-year 2026 US real GDP growth will be 0.0% or below (negative), resolving YES if the annual figure is negative. Key considerations: 1. **Reference class**: Post-WWII negative annual GDP years are rare (~15% base rate), occurring mainly during severe recessions (2009, 2020, 1982, 1980, 1974-75). The bar here is annual-level negative growth, not just a quarter or two. 2. **Current context (April 2026)**: Q1 2026 GDP data may be partially available. The macro environment includes significant tariff escalations, elevated trade policy uncertainty, and potential consumer/business confidence deterioration. These are meaningful headwinds but don't automatically produce negative full-year growth unless they're severe and sustained. 3. **Causal mechanism for YES**: Tariff shocks → reduced real consumer purchasing power + reduced business investment + supply chain disruptions → multiple quarters of contraction → annual figure turns negative. This chain requires the shocks to be large, the policy not to reverse, and no offsetting fiscal/monetary stimulus to succeed. 4. **Temporal analysis (305 days to resolution)**: Full-year 2026 GDP is reported as BEA advance estimate in late January/early February 2027. With 3 quarters still to play out (Q2, Q3, Q4 2026), the question is open. If Q1 2026 was negative (possible given tariff front-loading and inventory dynamics), two more negative quarters would be needed for an annual negative figure — or the Q1 drag would need to be deeper than any Q2-Q4 recovery. The market resolves February 28, 2027, after the advance estimate. 5. **Differentiating factor**: This asks for annual negative GDP, which is a higher bar than a technical recession (which only requires two consecutive quarters). Even in 2008 (a severe recession), annual GDP was barely negative. Annual negative GDP requires sustained broad-based weakness. However, current policy shocks are unusually large and rapid. 6. **Key uncertainties**: Whether tariffs remain in place, whether the Fed cuts rates enough to offset demand weakness, whether labor market holds up, and whether Q1 2026 was actually negative.

2. Research Parallel tool calls · legacy v2

Tool	Status	Time	Items
kalshi_data	OK	2.2s	-
kalshi_orderbook	OK	0.2s	-
fred_data	OK	2.4s	-
article_search	OK	0.7s	-
web_search	OK	57.9s	-
wikipedia_lookup	OK	1.4s	-
code_execution	OK	0.1s	-

3. Evidence Synthesis Sonnet · 22 items · legacy v2

#	Strength	Credibility	Direction	Source	Claim	Priced In
1	STRONG	78	↓ DOWN	kalshi_data	The Kalshi prediction market prices 2026 annual GDP at 0.0% or below at only 5%, with a high-liquidity orderbook (depth 31,333) and a stable 30-day trend (flat), suggesting informed market participants see very low probability of negative annual GDP.	Yes
2	STRONG	80	↑ UP	article_search	Goldman Sachs raised its 12-month US recession probability to 30% following the Iran war (as of late March 2026), while Moody's Analytics puts it at 48.6% and EY-Parthenon at 40%.	Yes
3	STRONG	78	↑ UP	article_search	The US-Israel attack on Iran on Feb. 28, 2026 sparked a major oil supply disruption described as 'the biggest in history,' raising energy prices and inflation risks that economists say meaningfully increase recession probability.	Yes
4	STRONG	92	↑ UP	web_search	Q4 2025 real GDP growth was revised down to 0.5% annualized (third estimate, April 9, 2026), a significant deceleration from Q3 2025's 4.4%, suggesting the economy entered 2026 with little momentum.	Yes
5	MODERATE	72	↓ DOWN	web_search	Q1 2026 nowcasts ranged from 1.2% to 2.4% annualized as of late April 2026, with Atlanta Fed GDPNow revised down to 1.2% by April 21, suggesting positive but weak Q1 growth — not a recession quarter.	Yes
6	STRONG	82	↑ UP	article_search	Trump's tariff regime continued after the Supreme Court struck down Liberation Day tariffs in February 2026, with replacement 10-15% global tariffs enacted under Section 122, maintaining significant trade policy uncertainty and headwinds to growth.	Yes
7	STRONG	90	↓ DOWN	fred_data	Initial jobless claims (ICSA) as of April 18, 2026 were 214,000 — down 16,000 year-over-year — indicating the labor market remains relatively healthy with no sign of mass layoffs consistent with recession.	Yes
8	MODERATE	88	NEUTRAL	fred_data	Nonfarm payrolls (PAYEMS) grew by only 152,000 year-over-year as of March 2026, a sharply decelerated pace from prior years, and the unemployment rate rose slightly to 4.3% (+0.1pp YoY), indicating a softening but not contracting labor market.	Yes
9	MODERATE	85	↓ DOWN	code_execution	Post-WWII historical base rate of negative annual US real GDP is approximately 15% (12 years out of 80), establishing a relatively low prior for this outcome.	Yes
10	STRONG	80	↓ DOWN	web_search	Philadelphia Fed Survey of Professional Forecasters expected full-year 2026 real GDP growth of 2.5% on an annual-average basis (Q1 2026 survey), well above zero, though this was before the Iran war escalation.	Yes
11	MODERATE	72	↓ DOWN	web_search	Earlier consensus forecasts from Goldman Sachs (2.6%), RSM US (2.2%), and Deloitte showed positive full-year 2026 GDP growth expectations before the Iran war shock, indicating substantial buffer above zero.	Yes
12	MODERATE	72	↑ UP	article_search	Trump's tariff regime has caused factory jobs to fall and inflation to rise one year after Liberation Day (April 2026), with 80-85% of tariff costs absorbed domestically via corporate margin compression or consumer price increases.	Yes
13	MODERATE	88	↑ UP	fred_data	CPI rose by ~10.5 index points year-over-year as of March 2026, indicating substantial inflation that erodes real consumer purchasing power and could suppress real GDP growth.	Yes
14	MODERATE	88	↓ DOWN	fred_data	The 10Y-2Y Treasury yield spread is +0.52% as of April 28, 2026 — positive and unchanged year-over-year — indicating no yield curve inversion signal that historically precedes recessions.	Yes
15	MODERATE	88	↓ DOWN	fred_data	The Federal Reserve has cut rates by 69 basis points year-over-year to 3.64% as of March 2026, providing some monetary accommodation against growth headwinds.	Yes
16	STRONG	76	↓ DOWN	kalshi_data	Kalshi market pricing of 5% for GDP ≤0% in 2026 reflects high-liquidity collective wisdom that full-year negative GDP is very unlikely, even accounting for downside risks.	Yes
17	MODERATE	85	↑ UP	fred_data	University of Michigan consumer sentiment (UMCSENT) was 53.3 in March 2026, up only 1.1 points year-over-year — historically very low levels that signal deep pessimism consistent with recessionary conditions, though marginally less negative than a year ago.	Yes
18	STRONG	82	↑ UP	article_search	The Iran war (US/Israel attack on Iran, Feb. 28, 2026) disrupted ~20% of global crude and natural gas supplies through the Strait of Hormuz, representing a major negative supply shock to the global economy.	Yes
19	MODERATE	75	↑ UP	article_search	Trump's tariff policy continues to depress job growth and raise prices as of April 2026, while the trade deficit has declined for 10 consecutive months, suggesting mixed impacts on GDP components.	Yes
20	STRONG	80	↑ UP	web_search	Atlanta Fed GDPNow was revised down from 3.1% to 1.2% for Q1 2026 between February and April 21, 2026, driven by widening trade deficits and weaker industrial production — directionally consistent with deteriorating conditions but not yet negative.	Yes
21	MODERATE	78	↑ UP	web_search	Philadelphia Fed SPF Q1 2026 put the probability of a Q1 2026 GDP contraction at 17.8% — elevated but not the modal outcome, suggesting leading indicators signal meaningful but not dominant downside risk.	Yes
22	STRONG	90	↓ DOWN	fred_data	Initial jobless claims of 214,000 (April 18, 2026) and only a 0.1pp rise in unemployment suggest the labor market — the most critical GDP support mechanism — has not deteriorated to recession-consistent levels.	Yes

Information Gaps

Q1 2026 official BEA advance estimate not yet released (due April 30, 2026) — this is the single most important missing data point for assessing the 2026 annual trajectory
No data on Q2-Q4 2026 GDP forecasts broken down by quarter post-Iran war, which would clarify whether a full-year negative outcome is arithmetically plausible
Severity and duration of Iran war oil supply disruption is unclear — whether the Strait of Hormuz disruption is sustained or brief is critical for magnitude of the shock
No data on business investment (capex) trends in early 2026, which is a key leading indicator of GDP beyond consumer spending
No information on Federal Reserve's forward guidance or whether additional rate cuts are planned to offset demand weakness
No post-Iran war updated consensus forecasts for full-year 2026 GDP growth (the most recent forecasts predate or barely capture the Feb. 28 attack's full economic impact)
No data on current oil/energy prices or how much they've risen since the Iran war, which would clarify the magnitude of the inflationary supply shock
No data on residential or commercial real estate investment trends in early 2026

Key Uncertainties

Duration and intensity of Iran war oil supply disruption: a prolonged Strait of Hormuz closure would significantly amplify recession risk; a quick resolution would reduce it
Whether Trump's replacement tariffs (Section 122) survive legal challenges and remain in place throughout 2026
Whether the Federal Reserve can cut rates fast enough to provide meaningful stimulus without exacerbating inflation from the energy shock (stagflation risk)
Q1 2026 GDP actual outcome (releasing April 30, 2026) — if negative, it sets a much lower bar for the remaining quarters to produce a positive annual figure
Whether consumer spending remains resilient despite low sentiment (the 'boomcession' divergence between sentiment and actual spending behavior)
Whether trade deficit reduction (10 consecutive months) provides a net positive contribution to GDP that offsets other drags

Market Context

Price: 0.05 · 7d: -0.01 · 30d: +0.00
Volume: MODERATE · Depth: HIGH
Reliability: HIGH — 578 avg daily contracts, depth of 31,333, stable 30-day trend at 5%; the market is liquid and has been pricing this outcome consistently low with no recent upward movement despite Iran war news

4. Independent Forecaster Opus · No market price · legacy v2 Did NOT see market price

Independent estimate: 14% (60% confidence)

base rate

13%

62% conf

evidence driven

10%

62% conf

contrarian

18%

55% conf

Spread

8pp

Low disagreement

sq1: Will the US economy enter a recession (two consecutive quarters of negative GDP growth) at any point in 2026?

32%

Base rate of recession in any given year is ~15-20%. Evidence pushes UP: Iran war oil shock (Feb 28, 2026) disrupting 20% of global crude is a major supply shock; Q4 2025 already weak at 0.5%; tariff regime persists; consumer sentiment at 53.3 is recessionary-level. Evidence pushes DOWN: Q1 2026 nowcasts at 1.2-2.4% (positive); jobless claims at 214K are healthy; no yield curve inversion; Fed has cut 69bp; professional forecasters' recession probabilities are 30-49% (not majority). Two consecutive negative quarters in Q2-Q4 2026 is plausible given the shocks but not the modal outcome. Estimate ~32%.

sq2: Will full-year 2026 real GDP growth be negative?

15%

Base rate ~15% for negative annual GDP. Annual negative GDP is a high bar — even in 2008 it was barely negative. Pre-Iran war SPF was 2.5%, providing substantial buffer. Q1 2026 likely positive (~1.2-2%). For annual to go negative, need ~3 strongly negative quarters averaging worse than -2% to overcome positive Q1. Iran war and tariffs are headwinds but oil supply shocks have historically caused inflation more than deep contraction. Even severe-looking conditions usually produce slow growth, not annual contraction. Pushing slightly UP from 15% base rate due to confluence of shocks (tariffs + oil + weak Q4 carryover): ~15-17%.

sq3: Are leading indicators consistent with negative full-year 2026 GDP?

25%

Leading indicators are mixed — deteriorating but not collapsing. UP factors: consumer sentiment at recessionary 53.3, GDPNow revised down sharply, Iran oil shock, tariff drag on factory jobs, inflation eroding real income. DOWN factors: jobless claims healthy, no yield curve inversion, payrolls still positive, Fed cutting, Q1 nowcasts still positive. SPF Q1 contraction probability of 17.8% is informative — elevated but minority view. Indicators consistent with slow growth or mild recession, not annual contraction. ~25%.

Show full reasoning trace

base rate: Post-WWII negative annual real GDP occurs ~15% of years, requiring severe and broad-based weakness (e.g., 2009, 2020, 1982). Even bad recession years (2001, 2008) often show slightly positive annual GDP.

evidence updates: Iran war oil shock and persistent tariffs push UP by ~5-7%. Weak Q4 2025 carryover and low consumer sentiment push UP by ~3%. However, Q1 2026 nowcasts of 1.2-2.4% (positive), healthy jobless claims, no yield curve inversion, and Fed cuts push DOWN by ~5%. Pre-shock professional forecasts at 2.2-2.6% provide substantial buffer above zero.

combination method: Sub-question 2 most directly addresses the resolution criterion. Sub-questions are positively correlated. Weighted average of 0.25 is too high because sq1 (recession) doesn't imply annual negative GDP — many recessions have positive annual figures. Adjusting toward sq2 estimate.

final: With Q1 2026 likely positive and the question requiring annual contraction, the bar is high. Even with major shocks, achieving ≤0% annual growth is unlikely. Final estimate: 13%.

ensemble: {'ensemble_count': 3, 'perspectives': {'base_rate': {'p_yes': 0.13, 'confidence': 0.62}, 'evidence_driven': {'p_yes': 0.1, 'confidence': 0.62}, 'contrarian': {'p_yes': 0.18, 'confidence': 0.55}}, 'spread': 0.08, 'individual_p_yes': {'base_rate': 0.13, 'evidence_driven': 0.1, 'contrarian': 0.18}}

5. Devil's Advocate Sonnet · legacy v2 Market price revealed

Asymmetric Evidence Reasoning Flaw

Challenges

The forecaster's sq2 estimate of 15% essentially equals the unconditional base rate, but the conditions for 2026 are NOT generic. With Q1 2026 nowcasts at +1.2-2.4% and pre-shock SPF at 2.5%, the conditional base rate for annual negative GDP given a positive Q1 nowcast and no yield curve inversion should be materially BELOW 15%. The forecaster correctly notes Q1 provides a 'buffer' but doesn't quantify how much this lowers the probability — historically, years starting with positive Q1 growth and no inverted curve almost never end negative annually.
The arithmetic constraint is underweighted: to get annual ≤0% with Q1 at ~+1.5%, you need Q2-Q4 to average roughly -2% annualized or worse. This is a 2008-Q4/2020-Q2 magnitude sustained for three quarters. The forecaster acknowledges this but still lands at 13-15%, which seems inconsistent with the severity required. An oil shock historically produces stagflation (positive nominal, weak real) not -2% sustained contraction.
The contrarian ensemble member at 18% appears to be double-counting recession risk as annual-negative risk. The forecaster's own combination_method note flags this ('sq1 doesn't imply annual negative GDP') but the ensemble still pulls the central estimate up.
The market at 5% is liquid (578 daily contracts, depth 31k) and has NOT moved on the Iran war news (30d trend flat). This suggests sophisticated participants view the oil shock as insufficient to flip annual GDP negative given the Q1 buffer. The forecaster doesn't engage with why the market hasn't moved — dismissing this as just 'market signal' misses that the market has already digested the same Iran war information.

Suggested adjustment: -4pp

The 15% base rate is unconditional; conditioning on (a) positive Q1 nowcast, (b) no yield curve inversion, (c) healthy jobless claims, and (d) Fed easing should lower the conditional probability meaningfully below 15%. The arithmetic hurdle (need Q2-Q4 averaging ~-2% to overcome positive Q1) is severe and not adequately reflected. A forecast in the 8-10% range better reflects the conditional probability given specific 2026 conditions, independent of where the market sits.

Market comparison: Forecaster: 13.7%, Market: 5.0%. The 8.7pp divergence is partially justified by genuine downside shocks (Iran war, tariffs, weak Q4 carryover) that warrant being above the market's 5%. However, the forecaster's reliance on the unconditional 15% base rate without sufficient downward conditioning suggests the true value is closer to 8-10% than 13.7%. The market's stability through the Iran war news is informative.

6. Aggregator Opus · final calibrated forecast

8% (60% confidence)