State of the economy at the end of 2026
4 markets · 5mo
The market cluster assigns the highest probability to avoiding extreme outcomes, with 'soft landing' the most contested scenario at 40% implied chance, while 'slack/disinflation' and 'stagflation' are seen as very unlikely, suggesting traders expect a middling, slightly inflationary path.
📊 Base rate: In post-1960 US economic cycles, roughly 60% of expansions ended in a recession within five years, making the current 40% chance of a soft landing slightly above the historical norm for avoiding a downturn.
What's driving it
- • Persistent core inflation above 3% has kept the 'overheating' scenario alive, despite the Fed's rate hikes (Reuters, Jul 15).
- • GDP growth slowed to 1.8% in Q2 2026, below trend, fueling bets against a 'soft landing' (Bloomberg, Jul 18).
- • Unemployment held at 4.1% in June, supporting the 'slack/disinflation' case but not strongly enough to push its odds above 8% (BLS, Jul 5).
The bullish case
- • If inflation continues to ease without a recession, the 'soft landing' outcome would be confirmed, as recent wage growth data suggests cooling labor demand (Reuters, Jul 12).
- • A sharp drop in energy prices could push headline inflation below 2%, making 'slack/disinflation' the realized state, though odds are low (EIA, Jul 16).
The bearish case
- • Sticky services inflation and rising rent costs could tip the economy into 'stagflation', with growth below 1% and inflation above 4% (WSJ, Jul 14).
- • A sudden consumer spending pullback might trigger a recession, making 'soft landing' impossible and 'overheating' irrelevant, as retail sales missed forecasts in June (CNBC, Jul 17).
What to watch
- • July 29-30 FOMC meeting: a surprise rate cut would boost 'soft landing' odds, while a hawkish hold would increase 'stagflation' fears.
- • August 7 release of Q2 GDP revision: a downward revision below 1.5% would raise 'stagflation' and 'slack' probabilities.
- • September 6 August jobs report: a jump in unemployment above 4.5% would sharply reduce 'overheating' and 'soft landing' chances.
AI-generated · grounded in recent news + odds · informational only, not advice. Verify on the source platform.
Markets in this event
State of the economy at the end of 2026? — Stagflation
Yes ≈ 12% chance
State of the economy at the end of 2026? — Soft landing
Yes ≈ 62% chance
State of the economy at the end of 2026? — Overheating
Yes ≈ 20% chance
Data from Kalshi’s public API, for informational purposes only. PredictPal is not affiliated with any platform and does not facilitate trading.
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