What Prediction Markets Are Forecasting

Prediction markets are forecasting that a US government shutdown is almost certain to happen this Saturday. The current market price translates to a near 100% probability, meaning traders collectively see a shutdown as virtually guaranteed. This level of market confidence is unusually high and indicates that traders see almost no path for Congress to pass the necessary funding bills in time.

Why the Market Sees It This Way

The high probability stems from a clear lack of progress in Congress. Government funding for several key agencies expires at midnight on Friday, March 1st. Lawmakers have been negotiating a package of bills to fund these agencies, but as of Thursday, no final agreement had been reached or released for a vote. The House of Representatives has rules requiring bills to be published for 72 hours before a vote, making a last-minute deal before the deadline logistically impossible without special procedures that require unanimous consent, which is politically difficult.

This situation is a recurring feature of US budget politics. Congress often relies on short-term funding extensions, called continuing resolutions (CRs), to avoid shutdowns while buying more time for deals. The last shutdown, a partial one, occurred for 35 days between 2018 and 2019. The current impasse suggests that even a short-term extension is not assured, leading markets to price in a shutdown as the default outcome.

Key Dates and Events to Watch

The absolute deadline is Friday, March 1st, at midnight. If funding lapses, a shutdown begins Saturday, March 2nd. The key event to watch is whether Congress can pass and the President can sign either a full funding package or another short-term continuing resolution before that deadline. Any announcement from congressional leaders on a deal or a vote schedule will be the primary signal. If a shutdown begins, the next focus shifts to how long it lasts, which depends on how quickly negotiators can resolve their disagreements.

How Reliable Are These Predictions?

Prediction markets have a solid track record on short-term political events like government shutdowns, where the variables are well-known and the deadline is concrete. They effectively aggregate the collective judgment of participants who are incentivized to be correct. However, their accuracy can be limited by sudden, last-minute political maneuvers. While the market is rarely this confident, a 100% probability does not mean an event is inevitable. It reflects the available information, which currently points overwhelmingly toward a shutdown. The main limitation is that these markets can shift rapidly if unexpected news breaks, though time for that is now extremely short.