Will Trump cause a recession in 2025? Here’s what betting markets are predicting

As unelected billionaire Elon Musk hacks his way through the federal government, adding tens of thousands to the nation’s unemployed, and President Donald Trump slaps painful tariffs on the United States' three biggest trade partners, tanking the stock market and sparking fear in American businesses, betting markets are taking wagers on whether the nation will dive into a recession this year.

Polymarket, one the leading predictors, says there is a 37% chance America will slip into a recession in 2025. Kalshi, another leading predictor, says there’s a 42% chance. Both numbers have rise sharply in the past week.

Trump launched a trade war Tuesday, drawing immediate retaliation from Mexico, Canada and China and sending financial markets into a tailspin.

Less than 24 hours after sparking the economic firestorm, Trump will stand before a joint session of Congress on Tuesday to give an accounting of his turbulent first weeks in office as a divided nation struggles to keep pace, with some Americans fearing for the country’s future while others are cheering him on.

Senate Minority Leader Chuck Schumer, a New York Democrat, told reporters at the Capitol that Trump was “incapable of being straight with the American people about the mess he’s created in his short time in office.”

Democrats are spotlighting the people who’ve been affected by the way the Trump administration has tried to dismantle parts of the federal government in the weeks since Trump took office. They’re also slamming Trump for the economic effects of his tariff plans.

Democrats had struggled to coalesce around a plan to counter Trump in the early days of his chaotic second term. But as the impact of his actions becomes clear, congressional Democrats have become enlivened in their responses.

“I get that people wanted change,” said Sen. Amy Klobuchar, D-Minn. “I get that they wanted someone to shake things up, to work on bringing health care costs down and doing something about housing, but they didn’t want this.”

The tariffs are prompting warnings from retailers, including Target and Best Buy, as they report their latest financial results. Target fell 2.4% despite beating Wall Street’s earnings forecasts, saying there will be “meaningful pressure” on its profits to start the year because of tariffs and other costs.

Best Buy plunged 12.1% for the biggest drop among S&P 500 stocks after giving investors a weaker-than-expected earnings forecast and warning about tariff impacts.

“International trade is critically important to our business and industry,” said Best Buy CEO Corie Barry.

Barry said China and Mexico are the top two sources for products that Best Buy sells, and it also expects vendors to pass along tariff costs, which would make price increases for American consumers likely.

The AP contributed to this report.

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