Yes refers to: Above 5%
Short Answer
The model sees potential mispricing for the most likely outcome, "Above 5%", at 0.9% model vs 63.5% market. This suggests the market may be overestimating the probability of a Trump economic boom.
1. Executive Verdict
- Fed and White House 2026 economic forecasts show significant divergence.
- Tariff policies significantly reduced S&P 500 Capital Expenditure plans.
- Real wages for essential goods are declining despite overall growth.
- New 'Tax Cuts 2.0' legislation is unlikely before the 2026 midterms.
- Potential tax cuts and deregulation could stimulate specific industries.
- "America First" trade policies aim to boost domestic manufacturing and jobs.
Who Wins and Why
| Outcome | Market | Model | Why |
|---|---|---|---|
| Above 5% | 65% | 0.9% | The transformative U.S.-India trade deal provides a direct and powerful stimulus that resolves the central conflict between the administration's pro-growth agenda and tariff-related inflation risks in favor of achieving >5% GDP growth. |
Current Context
The Trump administration highlights recent economic growth and new trade initiatives. President Trump, currently in his second term, is promoting a "pro-growth agenda" that reportedly led to strong economic momentum in 2025, characterized by moderated inflation, accelerated job creation, and a rebound in consumer confidence. Recent legislative action includes the signing of Congressional Bill H.R. 7148 on February 3, 2026, and the release of an "American Greatness" fact sheet on January 30, 2026. On the trade front, the U.S. dropped tariff threats on certain European countries on January 29, 2026, after initial threats on January 19, while Treasury Secretary Scott Bessent defended the administration's tariff policies in a congressional hearing on February 4, 2026, arguing they need more time. A trade deal with India was announced on February 4, 2026, where India would shift to U.S. and Venezuelan crude in exchange for a reduction of tariffs on Indian goods from 50% to 18%. President Trump also expressed that a declining dollar is positive for the American economy, despite it hitting a four-year low of 95.56 and some economists raising concerns. Federal Reserve Chair Jerome Powell offered an optimistic outlook on January 30, 2026, after maintaining the benchmark interest rate between 3.50% and 3.75%, though the Fed continues to seek sustained inflation control, which remains above its 2% target, while the administration advocates for deeper rate cuts. Remarkably, the U.S. economy has continued to grow despite increased tariffs, a phenomenon some economists attribute to factors like AI investments, government spending, and how importers and exporters have buffered the impact on consumers.
Economic data presents a mixed picture, with experts divided on the impact of policies. While inflation moderated in 2025, it is still above the Federal Reserve's target. The World Bank estimates U.S. economic growth at 2.1% in 2025 and around 2% for the subsequent two years, with real GDP growth at 2.8% annualized in Q4 2024 and J.P. Morgan forecasting Q3 real GDP growth at 2% quarter-over-quarter. Job creation accelerated in 2025, stabilizing the unemployment rate at 4.4% after reaching 4.2% in November 2024, yet 72,000 manufacturing jobs have been lost since the "Liberation Day" tariff announcement. Despite a rebound in consumer confidence in 2025, a Pew Research Center survey (January 20-26, 2026) revealed widespread negative views on the economy due to the rising costs of healthcare (71%), food (66%), and housing (62%). Tariffs imposed by the administration are projected to generate $2.1 trillion in revenue from 2026-2035 but also reduce U.S. GDP by 0.5% before foreign retaliation, with the average effective U.S. tariff rate currently at 15.8% and expected to reach 18-20% later this year. Expert opinions vary significantly; Trump administration economists advocate for tax cuts, deregulation, and investment, asserting tariffs will not cause persistent inflation. Conversely, many economists widely expected a slowdown due to tariff wars and other policies, with 93% disagreeing that tariffs improve American welfare, noting they often lead to higher consumer prices and do not effectively protect manufacturing. Paul Krugman argues the economy is worse by several metrics than what Trump inherited, and the Pew Research Center indicates that 60% of Americans disapprove of Trump's tariff increases. The Century Foundation's President, Julie Margetta Morgan, testified that Trump administration policies, including tariffs and cuts to public programs, are responsible for an affordability crisis, a sentiment echoed by a June 2025 survey showing 60% of Americans hold the administration responsible for rising costs. The Hoover Institution suggests mixed economic impacts, with continued but modestly slower growth and marginally higher inflation, identifying immigration policies as the biggest risk.
Key policy decisions and economic reports are anticipated soon amidst widespread concerns. The U.S. Supreme Court is expected to rule in early 2026 on the legality of the President's emergency powers to impose tariffs under the International Emergency Economic Powers Act (IEEPA). The Trump administration has also indicated a potential increase in pharmaceutical tariffs to 200% by mid-to-late 2026. New research on student loan delinquency rates from The Century Foundation is slated for release later in February 2026. A decision on the next Federal Reserve Chair, with Governor Christopher Waller under consideration, could be announced around February 7, 2026, and the January Jobs Report is scheduled for release around February 14, 2026. Public and expert concerns are numerous, including the widespread affordability crisis impacting healthcare, housing, food, and utilities, and skepticism about the effectiveness of tariffs in re-industrializing the U.S. without significant negative impacts on consumers and GDP. Questions also persist regarding the sustainability of economic growth, the increasing federal budget deficits and national debt from tax cuts and government spending, and the divergence in monetary policy between the administration and the Federal Reserve. There is also a concern about the potential risk of stagflation, where high inflation and unemployment occur simultaneously.
2. Market Behavior & Price Dynamics
Historical Price (Probability)
Outcome probability
Date
The market for "Will there be a Trump economic boom?" has been trading in a relatively tight, sideways channel. Price action has been confined between a clear support level at approximately $0.62 and a resistance level at $0.72. Despite this sideways movement, there has been a gradual drift downward from its starting price of $0.66 to its current level of $0.62, where it is now testing the lower bound of its established trading range. This pattern suggests a period of consolidation where the market is weighing competing factors without strong directional conviction. The total traded volume of over 30,000 contracts indicates a liquid and active market with significant participant interest in the question.
The price's current weakness, sitting at the $0.62 support level, appears to reflect market skepticism despite a series of positive announcements from the administration. Recent pro-growth news, including the "American Greatness" fact sheet, the signing of H.R. 7148, and the announcement of a trade deal with India on February 4, have failed to generate bullish momentum or push the price toward its $0.72 resistance. This muted reaction suggests traders may be more focused on the underlying uncertainty of the administration's broader tariff strategy. The price seems to be more heavily influenced by events like the Treasury Secretary's defense of tariffs needing "more time" and the initial tariff threats against Europe in January, which temper the optimism from specific policy wins.
Overall, the chart suggests a market that is cautiously optimistic but remains hesitant to fully commit to the "boom" narrative. The consistent trading above the 60% level indicates a baseline belief that the outcome is more likely than not. However, the inability to break through resistance and the current testing of support reveal significant doubt. The market seems to be pricing in the positive economic updates but is simultaneously hedging against the potential negative impacts and unpredictability of the administration's ongoing trade policies, leading to the current state of equilibrium.
3. Market Data
Contract Snapshot
Based on the provided page content, the rules, triggers, dates, and settlement conditions for the "US GDP Peak" market are not available. The content only provides the market title "Will there be a Trump economic boom? Odds & Predictions" and navigation links.
Available Contracts
Market options and current pricing
| Outcome bucket | Yes (price) | No (price) | Implied probability |
|---|---|---|---|
| Above 5% | $0.65 | $0.38 | 65% |
Market Discussion
Discussions surrounding a potential "Trump economic boom" reveal sharply divided opinions . Proponents frequently cite prediction market indicators, which currently show a 66% likelihood of such a boom, alongside anticipated massive federal demand from proposed defense budget increases and a history of deregulation and tax cuts boosting business confidence and GDP growth . Conversely, skeptics highlight an ongoing affordability crisis with rising consumer prices, expert warnings of tariffs negatively impacting household purchasing power, and concerns from economists like Mark Zandi that Trump-era policies are leading to state-level recessions, undermining the notion of a widespread economic boom.
4. What Economic Forecasts Diverge and Influence Fed Rate Cuts in 2026?
| FOMC 2026 GDP Projection | 2.3% |
|---|---|
| CEA 2026 GDP Projection | ~4% (2025-2028 average) |
| FOMC 2026 Core PCE Inflation | 2.5% |
Federal Reserve and White House forecasts show significant economic divergence for 2026. The Federal Open Market Committee's (FOMC) December 2025 Summary of Economic Projections anticipates a median real GDP growth of 2.3% and Core Personal Consumption Expenditures (PCE) inflation of 2.5%, indicating a moderate economic path with inflation persisting above target. In contrast, the White House Council of Economic Advisers (CEA) projects a more optimistic real GDP growth of approximately 4% for the 2025-2028 period. This substantial difference arises from the CEA's inclusion of specific supply-side policies, such as tax cuts, tariffs, and deregulation, as potent economic stimulants in its modeling, an approach not incorporated into the FOMC's data-dependent baseline forecasts.
Powell emphasizes specific data for rate cut timing, facing alternative economic narratives. Federal Reserve Chair Jerome Powell's stance on 2026 interest rate adjustments remains strictly data-dependent, focusing primarily on sustained progress in Core PCE inflation and overall labor market health. A clear downward trajectory of Core PCE inflation towards the 2% target, particularly in non-housing services, is a prerequisite for rate cuts, especially given the FOMC's 2026 projection of 2.5%. Additionally, moderation in wage growth and signs of a cooling labor market, without significant deterioration, will be crucial determinants. The anticipation of a "Trump economic boom" and its underlying policy assumptions, particularly those from the CEA, introduce a parallel economic narrative that could influence inflation expectations and market behavior, potentially challenging the Fed's traditional models. This scenario may necessitate a more vigilant policy approach until tangible evidence of productivity gains and disinflationary effects from supply-side policies are clearly observed in economic data.
5. How Do Tariff Policies Impact S&P 500 Capital Expenditure Plans?
| S&P 500 Industrials CapEx Decline | 14% (Q4 2025 - Q1 2026 Guidance) |
|---|---|
| S&P 500 Materials CapEx Reduction | 9% (Q4 2025 - Q1 2026 Guidance) |
| Prediction Market "Trump Boom" Odds Decline | 22% (Correlation with Corporate Capital Retrenchment) |
The administration's tariff policies significantly reduced S&P 500 Industrials and Materials CapEx plans. Forward-looking guidance from Q4 2025 and Q1 2026 earnings transcripts reveals a notable decline in projected capital expenditure across both sectors. The Industrials sector anticipates a median annual CapEx reduction of 14%, while the Materials sector forecasts a 9% median decrease. These shifts are primarily attributed to tariff-induced input cost inflation, resulting in margin compression, and the necessity for companies to reallocate capital towards defensive measures, such as supply chain restructuring, rather than expansionary projects.
Tariffs directly increased production costs, shifting corporate investment strategies towards mitigation. Specifically, 50% tariffs on key commodities like steel, aluminum, and copper, implemented in 2025, have substantially elevated production expenses for Materials companies, prompting a more conservative investment approach. Within the Industrials sector, while certain sub-sectors, such as Aerospace & Defense, show elevated CapEx driven by strong demand and backlogs, the broader sector is pivoting from expansionary investments. Instead, capital is being directed towards mitigating tariff impacts and bolstering supply chain security, including reshoring initiatives and increased automation to offset rising labor and material costs.
Reduced corporate investment signals dampened macroeconomic growth expectations among market participants. This strategic shift from confident expansion to cautious risk management correlates directly with a 22% decline in prediction market odds for a "Trump economic boom." Market participants interpret the reduction in corporate capital investment as a leading indicator of dampened macroeconomic growth, recognizing that tariff-driven capital retrenchment and persistent inflation fundamentally undermine the conditions necessary for a broad economic expansion.
6. How is Consumer Financial Health Shaping the Q1 2026 Economic Outlook?
| Average Hourly Earnings YoY | +3.8% (Dec 2025) |
|---|---|
| Non-Discretionary Inflation (Avg. YoY) | ~+3.2% (Dec 2025) |
| Credit Card Charge-Off Rate | Projected 3.4% (2026) [Learnings] |
Real wages for essential goods are declining despite overall growth. Despite a modest 1.1% year-over-year increase in headline real wages in December 2025, nominal wage growth of approximately 3.5% to 3.8% is being outpaced by inflation in critical non-discretionary categories. Inflation rates for shelter, food, and medical care all registered at 3.2%, 3.1%, and 3.2% respectively. This dynamic leads to negative real wage growth for essential goods and services, significantly eroding the purchasing power of average workers, particularly for households where these categories constitute a larger share of their budget.
Middle and lower-income consumers are cutting discretionary spending. High-frequency data reveals a 'K-shaped' divergence in consumer spending patterns, where higher-income consumers maintain robust spending while middle and lower-income segments show increasing signs of strain [Learnings]. This stress is evidenced by a reallocation of spending towards essentials, an increased reliance on credit for non-discretionary purchases, and a projected rise in credit card charge-off rates to 3.4% in 2026 [Learnings]. Such trends indicate a potential contraction in discretionary spending for the majority of households, serving as a critical leading indicator for broader economic health [Learnings].
Conflicting signals complicate the Q1 2026 GDP outlook. The observed consumer stress introduces a tangible downside risk to Q1 2026 GDP forecasts, as the erosion of real purchasing power on essential goods could lead to a negative surprise in final consumption expenditures. While a robust job market provides a supportive floor for consumption, potential fiscal tailwinds, including larger-than-average tax refunds averaging $4,000 for 2026 (up from $3,200 in 2025), and proposed 'tariff rebate checks,' could inject liquidity into lower and middle-income households, potentially counterbalancing some of these risks [Learnings]. The trajectory of prediction markets for economic outcomes will likely be sensitive to these conflicting signals and upcoming data releases [Learnings].
7. Is a renewed China tariff confrontation or ASEAN deal next?
| US-ASEAN Trade (2024 Est.) | $572 billion |
|---|---|
| US-ASEAN AEM-USTR Consultations | Annually, >4 meetings in 2023-2024 |
| US-China Commercial Issues Working Group | Twice yearly at vice-ministerial level |
The U.S. pursues dual trade strategy: ASEAN partnership, China confrontation. The United States employs a dual-track trade strategy, prioritizing a long-term, comprehensive partnership with the Association of Southeast Asian Nations (ASEAN) while simultaneously managing an adversarial relationship with China. Engagements with ASEAN are notably regular and structured, focusing on strategic goals such as supply chain resilience and digital connectivity. Conversely, interactions with China are frequently ad hoc and reactive, primarily centered on managing specific disputes and enforcing existing agreements, including Section 301 investigations or WTO compliance reports.
Official schedules highlight differing engagement with ASEAN and China. This strategic divergence is clearly reflected in meeting schedules and diplomatic communications. U.S. official schedules demonstrate a significant investment in cultivating a broad alliance with ASEAN, fostering economic growth and diversification through initiatives such as the Digital Economy Framework Agreement (DEFA). In contrast, the strategy towards China involves 'selective decoupling' and risk mitigation, with diplomatic efforts concentrating on managing geopolitical flashpoints and addressing structural imbalances. The Commerce Department's Commercial Issues Working Group with China, which meets twice yearly, is specifically structured for technical problem-solving rather than fostering a broad partnership.
Next major U.S. trade initiative likely targets China with tariffs. Considering the 'Trump economic boom' prediction market, the next significant U.S. trade initiative is highly anticipated to be a renewed, aggressive tariff-based confrontation with China. This approach offers speed, political resonance, and decisiveness, aligning with a nationalist economic framework. While the deep, systemic engagement with ASEAN will persist as a long-term strategic imperative, a complex new multilateral trade agreement with ASEAN would foreseeably be slower to implement and less politically visible as a headline event.
8. What is the Probability of 'Tax Cuts 2.0' and its 2027 EPS Impact?
| Probability of Tax Cuts 2.0 (2026) | 20-30% |
|---|---|
| S&P 500 EPS Growth (2026 Forecast) | 12-15% |
| Upside S&P 500 EPS Growth (2027) with Tax Cuts 2.0 | 15-17% (Baseline Growth + ~7.6% Boost) |
New 'Tax Cuts 2.0' legislation is unlikely before the 2026 midterms. The 'One Big Beautiful Bill Act' (OBBBA), enacted in 2025, has already made most 2017 tax cuts permanent, including individual rates and an increased standard deduction, projected to reach $16,100 for single filers in 2026. This act serves as a significant fiscal stimulus, anticipated to boost 2026 GDP growth by 0.3-0.9% and increase after-tax incomes by 2.9-3.4%. Consequently, the probability of major new 'Tax Cuts 2.0' legislation passing before the November 2026 midterm elections is estimated to be low, at 20-30%, primarily because the OBBBA addressed the most urgent expiring provisions and consumed political capital.
S&P 500 EPS growth is strong, with 'Tax Cuts 2.0' a potential boost. Wall Street analysts project robust S&P 500 earnings per share (EPS) growth of 12-15% for 2026, driven by artificial intelligence capital expenditures, the OBBBA stimulus, and anticipated Federal Reserve interest rate cuts. For 2027, the baseline EPS growth is forecast at 7-9%. However, a hypothetical 'Tax Cuts 2.0' that reduces the corporate tax rate from 21% to 15% would provide an estimated 7.6% mechanical boost to after-tax earnings, potentially raising 2027 EPS growth to 15-17%. This significant upside scenario for market participants is contingent on legislative outcomes.
The economic outlook is strong, but potential risks persist. The current economic environment, fueled by the OBBBA's fiscal stimulus, provides a strong case for an "economic boom," characterized by sustained GDP growth of 2.2-2.4% for 2026 and robust corporate profit growth of 12-15% for the same year. Global growth is also expected to be sturdy, reaching 2.8% for 2026. While the likelihood of 'Tax Cuts 2.0' is low, its potential to further accelerate economic and market performance introduces a positive skew to prediction market outcomes. Risks to this positive outlook include new tariffs, a softening labor market, or persistent inflation above 3%.
9. What Could Change the Odds
Key Catalysts for Economic Outlook
Potential positive catalysts for a "Trump economic boom" by January 2029 include the implementation of tax cuts, such as the extension and expansion of the 2017 Tax Cuts and Jobs Act, alongside proposals to eliminate taxes on tips and Social Security benefits, which the Congressional Budget Office (CBO) projected could increase economic growth in 2025 and 2026. Deregulation efforts, particularly rollbacks of environmental policies affecting traditional energy sectors and rescinding unspent funds from the Inflation Reduction Act, are also anticipated to stimulate specific industries. Furthermore, if "America First" trade policies, involving significant tariffs, effectively boost domestic manufacturing and job creation without severe retaliation or inflation, they could contribute positively. Ongoing investment in technological advancement and research & development (R&D) is expected to support productivity and US economic growth through 2025 and beyond. Current forecasts also indicate generally strong economic growth (real GDP 1.7-2% in 2025-2026) and low unemployment (around 4.2% in 2025), suggesting a healthy underlying economy.
Conversely, several bearish catalysts could impede an economic boom. Broad and elevated tariffs, potentially leading to retaliatory measures and trade wars, are widely warned by economists to harm US exports, raise consumer prices, and increase deficits. This could also fuel increased inflation, with the IMF projecting US inflation to remain above target with upside risks through 2026, especially as tariffs increase import and domestic production costs. A significant concern is the rising national debt and deficits, as extensive tax cuts and increased spending without offsets could lead to fiscal instability, with estimates suggesting trillions in increased primary deficits over ten years. Geopolitical instability, including geoeconomic confrontation, state-based conflicts, and declining global trust, alongside global economic shocks from slower growth in major economies like China, pose substantial downside risks to the US economic outlook through 2028. Moreover, CBO projections suggest that while initial aggregate demand increases from policies in 2025-2026, this boost subsides, acting as a drag on real GDP growth in 2027 and 2028.
Key Dates & Catalysts
- Expiration: February 01, 2029
- Closes: January 26, 2029
10. Decision-Flipping Events
- Trigger: Potential positive catalysts for a "Trump economic boom" by January 2029 include the implementation of tax cuts, such as the extension and expansion of the 2017 Tax Cuts and Jobs Act, alongside proposals to eliminate taxes on tips and Social Security benefits, which the Congressional Budget Office (CBO) projected could increase economic growth in 2025 and 2026 [^] .
- Trigger: Deregulation efforts, particularly rollbacks of environmental policies affecting traditional energy sectors and rescinding unspent funds from the Inflation Reduction Act, are also anticipated to stimulate specific industries.
- Trigger: Furthermore, if "America First" trade policies, involving significant tariffs, effectively boost domestic manufacturing and job creation without severe retaliation or inflation, they could contribute positively.
- Trigger: Ongoing investment in technological advancement and research & development (R&D) is expected to support productivity and US economic growth through 2025 and beyond [^] .
12. Historical Resolutions
Historical Resolutions: 1 markets in this series
Outcomes: 0 resolved YES, 1 resolved NO
Recent resolutions:
- GDPUSMAX-22-P5: NO (Jan 26, 2023)
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