The Recession Consensus Is Wrong — And Here's the Base Rate to Prove It

Everyone is screaming "recession."

Twitter is on fire. LinkedIn economists are posting their doomsday charts. Your uncle who bought Bitcoin at the top is suddenly an expert on yield curves.

And the prediction market says 34%.

Let's Talk About What 34% Actually Means

It means that for every person putting money on recession, roughly two people are betting against it. Not hoping. Not tweeting. Betting. With real money that they'd prefer not to lose.

That's the beauty of prediction markets. They don't measure sentiment. They measure conviction weighted by capital. And right now, the capital is saying: probably not.

The Base Rate Reality Check

Here's something the recession doomers conveniently forget: base rates.

In the last 50 years, the US has experienced approximately 7 recessions. That's roughly one every 7 years. The last one was in 2020. By historical base rates alone, the probability of a recession in any given year is about 14%.

The market is pricing in 34% — more than double the base rate. So the market is actually already being generous to the recession crowd.

Who's Actually Right?

Here's my contrarian take: the recession narrative is being driven by the same people who predicted 8 of the last 2 recessions. They're professionals at being worried. It's their brand.

The market doesn't have a brand. It has a price. And that price is telling you something the talking heads won't: calm down.

Will there be a recession? Maybe. The market gives it about a one-in-three chance. But one-in-three is not "inevitable." It's not even "likely." It's the probability of rolling a 1 or 2 on a six-sided die.

Would you bet your portfolio on rolling a specific number on a die? Probably not.

So why are you betting it on a Twitter thread?

Reality check complete. What's your position?