This prediction market addresses whether the United States will experience negative GDP growth in 2026, specifically defined as a seasonally adjusted and annualized growth rate below zero percent for the full calendar year. The market's resolution depends on the 'Advance Estimate' for the fourth quarter of 2026, published by the U.S. Bureau of Economic Analysis (BEA) in January 2027. This official data point serves as the definitive measure of whether the economy contracted over the year. Gross Domestic Product is the broadest measure of a nation's economic output, encompassing the total value of all goods and services produced within its borders. A negative annual growth rate indicates a recession, a period of economic decline typically marked by falling income, rising unemployment, and reduced industrial production. Interest in this forward-looking question stems from its profound implications for financial markets, government policy, business investment, and household welfare. Market participants, economists, and policymakers closely monitor leading indicators and economic forecasts to gauge recession risks. The question for 2026 sits at the intersection of current monetary policy, fiscal trajectories, global economic conditions, and potential unforeseen shocks. Analyzing the probability of a 2026 contraction involves assessing the durability of the current economic expansion, the lagged effects of interest rate hikes, the sustainability of consumer spending, and the health of the labor market.

Historical Context

The United States has experienced 13 recessions since World War II, with the average economic expansion lasting about 5.5 years. The most recent recession, triggered by the COVID-19 pandemic, was exceptionally sharp but brief, lasting only two months from February to April 2020 according to the NBER. The subsequent recovery has been robust, fueled by unprecedented fiscal stimulus and accommodative monetary policy. Historically, recessions have often been preceded by aggressive Federal Reserve tightening cycles aimed at combating inflation, as seen prior to the 1990-91, 2001, and 2007-2009 downturns. The current cycle, where the Fed raised its federal funds rate from near zero in early 2022 to a target range of 5.25-5.50 percent by July 2023, represents the most rapid tightening in decades. The lagged effect of these rate hikes, which can take 12-18 months or more to fully impact the economy, is a key historical factor informing 2026 recession risks. Furthermore, periods of high inflation have frequently required policy-induced slowdowns to restore price stability. The U.S. economy has not experienced a full calendar year of negative GDP growth since the Great Recession in 2009, when output contracted by 2.6 percent.

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