$30.28K
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$30.28K
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Before 2027 If the U-3 unemployment rate from 2026 is above X the market resolves to Yes. Early close condition: This market will close and expire if a threshold is hit. This market will close and expire if a threshold is hit.
Prediction markets on Kalshi are pricing in a very high probability that the U-3 unemployment rate will exceed 5% before 2030. The leading contract for "Above 5%" is trading at approximately 95 cents, implying a 95% chance this threshold is breached. This price indicates the market views a rise in unemployment above this level as nearly certain within the specified timeframe, which runs from June 2025 to January 2030. The thin trading volume of roughly $6,000 across all related contracts suggests this consensus is not backed by deep liquidity, but the extreme price reflects strong conviction.
Two primary macroeconomic factors are driving this pessimistic outlook. First, the market is likely pricing in the historical inevitability of an economic recession within a typical business cycle. The U.S. has not experienced a recession since the brief 2020 pandemic-induced downturn, and the current economic expansion is already historically long by post-war standards. A contraction before 2030 is statistically probable, and recessions typically cause the unemployment rate to rise by 2-3 percentage points from its cycle low. Second, the Federal Reserve's restrictive monetary policy stance in 2023-2024, aimed at curbing inflation, has increased the risk of a policy-induced slowdown. While the labor market has remained resilient, markets are betting that the lagged effects of higher interest rates will eventually soften labor demand.
The current 95% probability could decrease if the U.S. economy achieves a "soft landing," where inflation returns to the Fed's 2% target without a significant rise in joblessness. Sustained labor force participation and strong productivity growth could also keep unemployment structurally lower. Key upcoming catalysts that could shift the odds include monthly jobs reports, Federal Reserve policy meetings, and any signs of re-accelerating inflation that forces the Fed to maintain higher rates for longer. Conversely, the odds could move even higher toward certainty if leading economic indicators, such as the Sahm Rule (which signals recession when the three-month average unemployment rate rises 0.5 percentage points above its low), are triggered. The market's early-close condition means a single jobs report showing unemployment crossing 5% would immediately resolve the contract to "Yes."
AI-generated analysis based on market data. Not financial advice.
This prediction market topic focuses on forecasting the peak U-3 unemployment rate during the 2026 calendar year. The U-3 rate, defined by the U.S. Bureau of Labor Statistics (BLS), is the official unemployment rate that measures the percentage of the total labor force that is jobless and actively seeking employment. The market resolves based on whether the annual average or a specific high point surpasses a predetermined threshold, with an early-close mechanism if that threshold is reached. This speculative instrument serves as a collective assessment of future labor market health, synthesizing expectations about economic growth, monetary policy, business cycles, and potential shocks. Interest in 2026 unemployment stems from its position within the current economic cycle, following a period of historically tight labor markets post-pandemic and amidst debates over the lagged effects of interest rate hikes. Analysts are watching for signs of whether the economy will achieve a 'soft landing' or enter a recessionary period by the mid-2020s, making 2026 a critical forecast horizon for policymakers, investors, and businesses planning long-term strategies.
The U.S. unemployment rate has experienced dramatic swings tied to economic cycles. Following the Global Financial Crisis, unemployment peaked at 10.0% in October 2009, followed by a slow, decade-long recovery to a pre-pandemic low of 3.5% in February 2020. The COVID-19 pandemic then caused the most rapid spike in modern history, with U-3 surging to 14.7% in April 2020, before an unprecedented fiscal and monetary response fueled a remarkably fast recovery. By 2023, the rate had returned to pre-pandemic levels, hovering near 50-year lows. Historically, periods of aggressive Federal Reserve tightening to combat inflation have often preceded recessions and rising unemployment. For example, the Volcker-era hikes in the early 1980s led to unemployment exceeding 10% in 1982-1983. The more recent tightening cycle that began in March 2022, with the Fed raising its policy rate from near zero to over 5% in just over a year, is one of the most rapid on record, creating uncertainty about delayed economic impacts. The question for 2026 is whether this cycle will repeat historical patterns or if structural changes in the economy will allow for a less painful disinflation.
The level of unemployment in 2026 has profound implications for the economic well-being of millions of Americans and the nation's political landscape. High unemployment directly translates to lost income, increased financial hardship, and eroded consumer confidence, which can create a negative feedback loop, further dampening economic growth. It also strains social safety net programs like unemployment insurance and can lead to long-term 'scarring' effects for workers who experience prolonged joblessness, including skill erosion and reduced lifetime earnings. Politically, the unemployment rate is a key metric for voters assessing economic management. A significant rise in 2026 would occur in the context of a presidential election year, potentially dominating the campaign narrative and influencing policy platforms. For markets, higher unemployment typically correlates with lower corporate profits, increased credit defaults, and shifts in asset allocation, affecting everything from stock valuations to bond yields.
As of mid-2024, the labor market remains historically tight with the unemployment rate below 4%, but there are signs of gradual cooling. Job growth has moderated from the torrid pace of 2021-2022, and wage growth, while still solid, has decelerated. The Federal Reserve has paused its rate-hiking campaign but has signaled a higher-for-longer stance, intending to keep policy restrictive until inflation shows sustained progress toward its 2% target. The central debate among economists is whether the current slowdown represents a controlled normalization toward a sustainable pace or the early stages of a more pronounced downturn that will fully manifest in 2025-2026. Leading indicators, such as job openings and initial unemployment claims, are being scrutinized for clues about the future trajectory.
The U-3 rate is the official unemployment rate, counting people without jobs who are actively seeking work. The broader U-6 rate includes marginally attached workers (those who have looked recently but not in the past 4 weeks) and those employed part-time for economic reasons. U-6 is typically about twice as high as U-3 and gives a more comprehensive view of labor underutilization.
A rising unemployment rate is typically caused by an economic slowdown or recession. This can be triggered by factors like aggressive monetary policy tightening to fight inflation, a decline in consumer or business spending, financial crises, or external shocks. Businesses respond by reducing hiring and laying off workers to cut costs.
Forecasts for unemployment two years into the future, like for 2026, have significant uncertainty. While models based on leading indicators and policy paths provide a baseline, accuracy is often low due to the potential for unforeseen economic shocks, shifts in monetary or fiscal policy, and changes in global conditions. Projections are best viewed as a range of plausible scenarios.
Not always, but historically a very low unemployment rate (below the 'natural rate') can contribute to wage-price spirals that fuel inflation, a relationship described by the Phillips Curve. However, this relationship has weakened in recent decades due to globalization and other factors, as seen in the late 2010s when low unemployment coexisted with subdued inflation.
Educational content is AI-generated and sourced from Wikipedia. It should not be considered financial advice.
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10 markets tracked
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| Market | Platform | Price |
|---|---|---|
How high will unemployment get before 2027? (Above 5%) | Kalshi | 31% |
How high will unemployment get before 2027? (Above 6%) | Kalshi | 15% |
How high will unemployment get before 2027? (Above 9%) | Kalshi | 7% |
How high will unemployment get before 2027? (Above 7%) | Kalshi | 7% |
How high will unemployment get before 2027? (Above 8%) | Kalshi | 6% |
How high will unemployment get before 2027? (Above 10%) | Kalshi | 5% |
How high will unemployment get before 2027? (Above 12%) | Kalshi | 3% |
How high will unemployment get before 2027? (Above 20%) | Kalshi | 3% |
How high will unemployment get before 2027? (Above 17%) | Kalshi | 3% |
How high will unemployment get before 2027? (Above 15%) | Kalshi | 3% |
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