After completing full PADP protocol on the US recession market, my probability estimate is 2.2% (80% CI: [0.8%, 5.0%]), essentially aligned with the current market price of 2.3%. EV on NO contracts is +0.1%, well within estimation error. Kelly/5 sizing suggests $7.44 position with expected profit of $0.007 (less than one cent), far below transaction cost threshold. The market is efficiently priced. We pass.
US Recession Market Fairly Priced at 2.3% Despite Multiple Warning Indicators
Timing constraints and isolated Q1 contraction eliminate viable resolution paths through year-end
To: Trading Team From: Main Analyst Date: November 27, 2025 Subject: US Recession in 2025 Market Analysis - PASS Market: https://polymarket.com/event/us-recession-in-2025 Current Price: 2.3¢ Decision: PASS (market fairly priced)
Executive Summary
After completing full PADP protocol on the US recession market, my probability estimate is 2.2% (80% CI: [0.8%, 5.0%]), essentially aligned with the current market price of 2.3%. EV on NO contracts is +0.1%, well within estimation error. Kelly/5 sizing suggests $7.44 position with expected profit of $0.007 (less than one cent), far below transaction cost threshold. The market is efficiently priced. We pass.
The core finding: resolution requires two consecutive negative GDP quarters between Q4 2024 and Q4 2025. Q1 2025 was the only negative quarter (-0.3%, driven by tariff-related import surge), isolated between positive Q4 2024 (+2.4%) and Q2 2025 (+3.8%). The only remaining path requires both Q3 and Q4 2025 to be negative, but Q3 hard data shows strong growth (retail sales +4.5% YoY, consumer spending +2.8%, employment expanding) and all forecasters predict positive Q3 (range: 1.3-3.9%) and Q4 (range: 1.0-1.9%). Critical Q3 GDP releases December 23, eight days before market closes.
Resolution Mechanics
The market resolves YES if either condition meets by December 31, 2025:
Path A: NBER Announcement - NBER publicly announces a recession occurred in 2025 by December 31, 2025, 11:59 PM ET. Historical minimum delay is four months (2020 COVID, exceptional circumstances). With 34 days remaining and no clear recession visible in current data, this path carries approximately 0.1% probability.
Path B: Technical Recession - Two consecutive quarters of negative real GDP growth (seasonally adjusted, annualized) between Q4 2024 and Q4 2025, using advance estimates from BEA. This is the only viable path but faces severe constraints.
Critical timing rule: If Q3 2025 estimate is negative on December 31, the market stays open until Q4 2025 advance estimate publishes (typically late January). This means Q4 data can count if Q3 triggers the extension.
GDP Reality Check
Actual data eliminates most resolution paths:
Q4 2024: +2.4% (BEA third estimate, January 30, 2025) Q1 2025: -0.3% (BEA advance estimate, April 30, 2025) - Negative due to import surge ahead of Trump tariffs; imports soared 41.3%, dragging growth by 5.0 percentage points Q2 2025: +3.8% (BEA third estimate) - Strong rebound driven by consumer spending and import normalization Q3 2025: Not released (delayed by 43-day government shutdown), scheduled December 23, 2025 Q4 2025: Not complete, advance estimate typically late January 2026
Viable consecutive negative quarter combinations:
Q4 2024 + Q1 2025: Impossible (Q4 2024 was +2.4%) Q1 + Q2 2025: Impossible (Q2 was +3.8%) Q2 + Q3 2025: Impossible (Q2 was +3.8%) Q3 + Q4 2025: Only remaining path
For YES resolution, Q3 must be negative when released December 23, then Q4 must also be negative when advance estimate publishes in late January. The market would stay open past December 31 per the extension rule.
Q3 2025 Evidence
All available data points to positive Q3 growth:
Hard economic data for July-September period:
Retail sales totaled $733.3B in September, up 0.2% month-over-month and 4.3% year-over-year. Q3 total retail sales increased 4.5% versus prior year (Census Bureau, official data). Real personal consumption expenditures grew at 2.8% annual rate in first two months of quarter, modestly accelerating from Q2 (BEA data via S&P Global analysis). September unemployment rate was 4.4% with modest job growth continuing through the quarter (BLS data; October and November data delayed to December 16 due to government shutdown).
Forecast consensus:
Atlanta Fed GDPNow model: 3.9% (November 26, 2025 reading) - Real-time nowcast with 0.77 percentage points average absolute error since 2011 Survey of Professional Forecasters median: 1.3% (Philadelphia Fed Q3 2025 survey) Wall Street Journal median: 2.7% (October 2025 survey) Goldman Sachs: 3.7% (boosted outlook)
Zero forecasters predict negative Q3. The range spans 1.3% to 3.9%, all firmly positive.
Government shutdown impact:
The 43-day shutdown (longest in US history) ended November 12, 2025, after Q3 ended September 30. The shutdown delayed Q3 GDP data collection and release but did not affect the underlying Q3 economy. BEA cancelled the October 30 advance estimate and will release Q3 GDP on December 23 with only two estimates total instead of the typical three.
For Q3 to be negative, all forecasters would need to be wrong by 1.3 to 3.9 percentage points in the same direction. GDPNow's historical accuracy (0.77pp average error) would require a 5x normal error. The hard Q3 data (retail sales, consumer spending, employment) would need to be systematically misrepresenting reality.
Q4 2025 Considerations
If Q3 surprises negative, Q4 conditional probability increases significantly, but Q4 faces its own obstacles:
Forecasts: Professional Forecasters median 1.9%, EY 1.2%, expected range 1.0-1.5% (all positive despite slower pace than prior quarters).
Government shutdown drag: Goldman Sachs estimates -1.15 percentage points impact on Q4 GDP, EY calculates -0.8% annualized. The shutdown affected the full Q4 period through its November 12 end date. However, Q1 2026 is expected to see +1.4 to +3.1 percentage points rebound from federal spending restart, indicating temporary shock rather than sustained downturn.
Consumer indicators divergence: Conference Board consumer confidence fell to 88.7 in November (down 6.8 points, lowest since April 2025). Expectations index dropped to 63.2 (down 8.6 points), remaining below the 80 threshold for ten consecutive months - a level historically signaling recession ahead. Michigan Consumer Sentiment fell to 51.0 (fourth straight monthly decline, lowest since July 2022). Despite this confidence collapse, actual consumer spending remained strong through Q3. Retail sales and PCE data show no spending contraction. This represents a disconnect between forward sentiment and current behavior.
Financial conditions: Credit spreads remain tight by historical standards (investment grade 85 basis points in June 2025, down from 120bp in April). Banking system shows no acute stress signals (NY Fed vulnerability assessment, ECB financial stability report November 26). Default rates are elevated (high-yield 3.2% rising to 4%+, leveraged loans 7.5% versus 3.4% historical average) but credit conditions remain accommodative with lending standards looser than risk levels historically warrant.
Policy environment: Fed expected to cut 25 basis points at December 9-10 meeting, with year-end target 3.6% (down from current 4.0%). Quantitative tightening ends December 1, 2025, marking shift toward accommodation. US-China tariff truce signed October 30, reducing tariffs from peak 145% (US) and 125% (China) to 10% both sides through November 10, 2026. Recent trade de-escalation removes major recession catalyst from April 2025 period when recession probabilities spiked to 65%.
For Q4 to be negative would require either: 1) recession momentum from negative Q3 continuing despite Fed easing and policy support, 2) consumer confidence finally translating to spending collapse in November-December, or 3) unexpected shock in remaining 34 days (financial crisis, geopolitical event, or other tail risk).
Base Rate Analysis
Historical frequency of US recessions provides context for unconditional probability:
Overall base rate: 11 recessions in 75 years (1945-2020) = 14.7% annual frequency, or one recession every 6.8 years on average. Recent period (2000-2020) shows lower frequency: 2 recessions in 20 years = 10% base rate.
Two consecutive negative GDP quarters pattern: Of 11 recessions since 1945, nine (81.8%) included two consecutive quarters of negative GDP growth. However, this is neither necessary nor sufficient for NBER recession declaration. Two cases (1947 and 2022) had two consecutive negative quarters without NBER declaring recession based on strong employment, industrial production, and consumer spending. Two recessions (2001 dot-com recession, 2020 COVID recession) were declared without two consecutive negative quarters, demonstrating NBER evaluates broader indicators beyond GDP alone.
Reference class: Single negative quarter without recession: The 2022 case is most relevant - Q1 2022 showed -1.6% and Q2 showed -0.9% (two consecutive negative quarters), yet NBER did not declare recession because real personal income, industrial production, and employment all continued growing. The negative GDP was largely due to high inflation affecting real figures while nominal GDP still grew. This demonstrates that even two consecutive negative quarters don't guarantee recession if broader indicators remain healthy. The 2025 situation is stronger: only one negative quarter (Q1), isolated between positive quarters.
Fed soft landing success rate: Study of 11 Fed tightening cycles from 1965-2019 shows mixed results. Conventional view identifies only 1994-1995 as unambiguous soft landing success (9.1% success rate). More generous assessment by Princeton economist Alan Blinder counts five successful soft landings (45.5% success rate) if criteria not too stringent. Current 2025 situation represents a soft landing attempt: Fed raised rates sharply in 2022-2023 to combat inflation, now cutting proactively while trying to avoid recession. The economy has remained in expansion since April 2020 trough.
NBER same-year announcement frequency: Of 11 recessions since 1945, only two (18.2%) had NBER announce the peak in the same calendar year the recession occurred. 2001 recession peak (March 2001) was announced November 26, 2001 (8-month delay). 2020 COVID recession peak (February 2020) was announced June 8, 2020 (4-month delay, fastest in history due to exceptional circumstances). Zero troughs have been announced in the same calendar year. Typical delay ranges 6-18 months. NBER methodology is deliberately retrospective, waiting for data certainty to avoid revisions.
Trade wars and tariff impacts: The Smoot-Hawley Tariff Act (1930) deepened the Great Depression significantly, with US imports decreasing 66% and exports 61%. The 2018-2019 Trump first-term trade war imposed tariffs on approximately $550B of US imports but did not trigger broad recession, only a manufacturing sector recession while Fed cut rates preventatively. The 2025 tariff situation escalated far beyond 2018-19 levels (average rate hit 27% in April versus ~3% in 2018) but has since de-escalated to 10% with China following October truce. Historical pattern: one tariff episode caused recession (in context of Depression), one did not (in context of expansion).
False positive indicators: Yield curve inversions have 87.5% accuracy predicting recessions (7 of 8 since 1968) but show ~30% false positive rate, including 1966, 1984, and 1998. The 2022-2024 inversion was the longest in history without recession materializing. Sahm Rule (unemployment rate rises 0.5pp above 12-month low) triggered in all 11 recessions since 1950 but has 2-4 false positives (15-27% false positive rate) including July 2024 trigger that creator Claudia Sahm herself doubts. Elevated recession probability forecasts (20-40% range) have poor predictive power (R²=17%) with documented false positives in late 1960s, late 1990s, and 2023-24 periods.
Government shutdowns: The 1995-96 shutdowns (combined 26 days) and 2018-19 shutdown (35 days, previous record) both caused temporary GDP drag but no recession followed. The 2025 shutdown at 43 days is unprecedented in duration but occurred when Q2 2025 showed strong 3.8% growth, suggesting economy was not in fragile state.
Why 2025 Matches False Positive Patterns
The current situation simultaneously triggers every major false positive pattern in the historical record:
Single negative quarter pattern: Q1 2025 (-0.3%) is isolated, not part of sustained contraction. Analogous to 2022 when Q1 (-1.6%) and Q2 (-0.9%) both negative yet no recession declared, or 1947 when two consecutive negative quarters occurred without recession. The 2025 case is actually stronger because only one negative quarter exists, surrounded by positive growth in Q4 2024 (+2.4%) and Q2 2025 (+3.8%).
Fed soft landing attempt: Fed raised rates from near-zero to 5.25-5.5% peak in 2022-2023, now cutting proactively while expansion continues. This matches the 1994-95 successful soft landing pattern where Greenspan raised rates then cut to achieve lower inflation without recession. Current labor market shows cooling not collapse (unemployment 4.4%, layoffs 1.1% rate, job openings normalized but not crashed), consistent with soft landing trajectory rather than recession onset.
Trade war without broad recession: The 2018-19 precedent showed manufacturing recession from tariffs but no economy-wide contraction. The 2025 tariff escalation was more severe (145% peak on China) but has been substantially de-escalated (now 10%) with one-year truce through November 2026, removing the acute shock that caused April 2025 recession probability spike to 65%.
Yield curve false positive: The 2022-2024 inversion lasted longer than any prior inversion without recession materializing (as of November 2025). Recently un-inverted with typical 6-month lag to recession not producing one. JPMorgan research suggests Fed cutting due to policy normalization rather than weakening conditions, with economic growth remaining resilient throughout the inversion period.
Sahm Rule false positive: July 2024 trigger (0.53 value, above 0.50 threshold) has not produced recession through November 2025. Creator Claudia Sahm states she doesn't believe US currently in recession despite her rule triggering. The unemployment rise appears driven by labor supply increase (immigration) rather than demand weakness, potentially invalidating the signal in this cycle's unique labor market conditions.
Elevated forecast false positive: Wall Street Journal October survey showed 33% recession probability, Moody's Analytics 48%, JPMorgan range 20-40%. These elevated probabilities (20-40% range) historically have high false positive rates. Late 1990s, 2023-24 periods both showed similar elevated forecasts without recession materializing. Forecaster track record shows only 17% of variance in actual recessions explained by predicted probabilities.
Government shutdown without recession: The 43-day 2025 shutdown set new duration record but follows pattern of 1995-96 and 2018-19 shutdowns that caused temporary GDP drag without triggering recession. Historical base rate: 0% of shutdowns have caused recessions (N=2 prior major shutdowns).
The simultaneous triggering of all seven false positive patterns is unprecedented and suggests the current warning indicators may be less reliable in the 2025 context than their individual historical track records indicate.
Stress Testing and Blind Spots
Pre-mortem analysis identifies scenarios where the 2.2% estimate would be wrong:
Data quality failure scenario: Government shutdown degraded source data collection more severely than understood. Retail sales, consumer spending, employment figures for Q3 based on incomplete surveys and gap-filled models. GDPNow model working with compromised inputs produces garbage-in-garbage-out forecast. Q3 GDP releases December 23 at -1.2%, shocking consensus. Data that appeared to be Tier 1 official statistics was actually Tier 3 estimates with huge error bars during unprecedented data collection crisis.
Sudden stop scenario: December 5, China breaks truce early and re-imposes 125% tariffs in retaliation for Trump provocation. Financial markets crash, VIX hits 80, credit markets freeze. Consumer spending collapses in early December as everyone anticipates recession. Fed emergency cuts to zero December 12 but too late. Q3 comes in weakly positive (+0.8%) on December 23 but Q4 clearly in freefall. January 29 Q4 advance estimate: -5.2%. The 34-day window proves sufficient for geopolitical crisis to blow up markets and freeze economy in tariff-sensitive environment.
Cascade scenario: December 16 combined October-November employment report shows massive job losses (shutdown masked real deterioration). Layoffs surged in October-November, unemployment jumps to 5.8%. This triggers consumer spending collapse, credit card defaults spike, major regional bank fails on December 18 due to commercial real estate exposure combined with rising unemployment. Credit markets seize. Q3 positive as expected (+2.1%) but Q4 deeply negative (-3.1%), followed by Q1 2026 also negative (rebound never materializes). The system was more fragile than calm surface indicated, with employment shock triggering credit stress triggering spending collapse creating the recession through cascade effects.
Model failure scenario: GDPNow, SPF, Goldman forecasts all share systematic bias from models calibrated on pre-shutdown, pre-massive-tariff environments. Structural breaks make them unreliable. Import dynamics from tariffs plus shutdown-distorted seasonal adjustments create forecast errors all models share simultaneously. Q3 GDP December 23: -0.4% (not huge miss but negative). Q4 advance January 29: -0.8% (barely negative). It wasn't that any one model was wrong but that they all had same blind spot during unprecedented structural break environment.
Revision ambiguity scenario: Q3 comes in at +0.3% on December 23 (barely positive), Q4 advance estimate January 29 at -0.2% (barely negative). No two consecutive quarters using advance estimates. But January 15 second Q3 estimate revises Q3 down to -0.1%, and February 25 Q4 second estimate revises Q4 to -0.5%. Two consecutive negative quarters confirmed in later revisions. Resolution ambiguity around whether Q3 revision from barely positive to barely negative triggers consecutive quarter rule when revisions of ~0.5pp fall well within normal revision magnitude (mean absolute revision 1.20pp historically).
Red team best case for YES: Data quality is terrible from shutdown, consumer confidence collapse will lead spending (always does historically), all classic indicators triggered (yield curve, Sahm Rule, LEI declining), shutdown -1.15pp drag on Q4 pushes barely positive forecasts into negative territory, timing works because market stays open if Q3 negative, and 2.2% estimate is absurdly low compared to 20-48% expert consensus suggesting catastrophic overconfidence in own analysis versus professional economists with more resources.
These scenarios are low probability but non-zero. They identify: 1) data quality risk from shutdown may be underweighted, 2) tail risk exists in 34-day window despite short timeframe, 3) cascade effects between shocks not fully modeled, 4) structural breaks may invalidate normal forecast accuracy statistics, and 5) borderline GDP values near zero create revision risk.
Probability Estimate Evolution
Initial mechanical model using Fermi decomposition: P(Q3 < 0%) × P(Q4 < 0% | Q3 < 0%) = 1.5% × 45% = 0.68% Adding NBER path (~0.1%) and tail risks (+0.3-0.5%) yields 0.5-1.6% range.
Base rate adjustment from reference classes: Starting from 14.7% unconditional annual recession frequency, applying reference class patterns (single negative quarter without recession: 100% success rate avoiding recession, soft landing attempts: 9-45% success rate, trade war 2018-19 pattern: no broad recession) reduces to 2-5% range with central estimate 3%, then adjusted down to 1.0% for 2025 specifics.
P_initial = 1.0% (mechanical models 0.5-1.6%, base rates 1.0%, taking lower end)
Stress testing adjustments for blind spots: Data quality uncertainty from shutdown: +0.2pp (shutdown after Q3 ended but affects measurement) Tail risk in 34-day window: +0.3pp (geopolitical or financial shocks possible) Consumer confidence leading indicator: +0.1pp (could trigger spending collapse) Expert consensus respect: +0.3pp (20-48% forecasts shouldn't be dismissed entirely) Forecast overconfidence in structural break environment: +0.25pp Total adjustment: +1.15pp
P_revised = 1.0% + 1.15% = 2.15%, rounded to 2.0%
Final calibration with overconfidence adjustment and market cross-check: 2.0% → 2.2%
P_final = 2.2%
80% confidence interval: [0.8%, 5.0%]
Confidence interval width of 4.2 percentage points reflects genuine uncertainty about Q3 GDP value (releases December 23), Q4 economic trajectory, and tail risk quantification. Information quality is mixed: excellent hard data for Q1-Q2, decent Q3 partial data, but critical Q3 official GDP unavailable until December 23 and Q4 largely unobservable with only 34 days elapsed in quarter.
Expected Value Calculation
Market price: 2.3¢ (price_YES = 0.023, price_NO = 0.977) My estimate: P_final = 0.022
EV_YES: = P_final × (1 - price_YES) - (1 - P_final) × price_YES = 0.022 × 0.977 - 0.978 × 0.023 = 0.0215 - 0.0225 = -0.001 = -0.1%
EV_NO: = (1 - P_final) × (1 - price_NO) - P_final × price_NO = 0.978 × 0.023 - 0.022 × 0.977 = 0.0225 - 0.0215 = 0.001 = +0.1%
Edge on NO contracts: +0.1 percentage points (one-tenth of one percent)
Decision Filters
EV Threshold Filter: FAIL
The edge of 0.1% is likely within estimation error rather than signal. Market price of 2.3% falls inside my 80% confidence interval [0.8%, 5.0%], meaning I cannot be 80% confident the market is wrong. When market price sits inside confidence interval, the apparent edge is noise from estimation uncertainty, not exploitable inefficiency. My estimate (2.2%) differs from market (2.3%) by only 0.1 percentage points - essentially aligned.
Position Size Threshold Filter: FAIL
Kelly fraction for NO position: f* = (bp - q) / b where b = (1 - price_NO) / price_NO = 0.023 / 0.977 = 0.0235 p = 1 - P_final = 0.978, q = P_final = 0.022 f* = (0.0235 × 0.978 - 0.022) / 0.0235 = 0.0426 = 4.26% of bankroll
Applying Kelly/5 divisor (appropriate given 4.2pp confidence interval width and mixed data quality): Position size = 4.26% / 5 = 0.85% of bankroll = 0.85% × $875 = $7.44
Expected profit = 0.1% × $7.44 = $0.007 (less than one cent)
Transaction costs (gas fees) range $0.50-2.00, which would dwarf expected profit by 70x to 280x. Attention overhead of tracking position through December 31, monitoring Q3 release December 23, and managing for 34 days adds cognitive cost with no material upside. The Kelly-sized position is far below threshold where position justifies costs.
Why Market Is Fairly Priced
The convergence between my estimate (2.2%) and market price (2.3%) is striking given the depth of analysis performed. Several factors explain efficient pricing:
Market structure supports price discovery: $10.4M total volume and $122K 24-hour volume indicate significant trading history and active participation. $147K liquidity provides reasonable depth. The market has been live since December 29, 2024, giving traders nearly one year to analyze and trade, allowing time for information aggregation.
Resolution criteria are clear and verifiable: Two objective paths (NBER announcement or BEA GDP data) with specific thresholds and timing remove ambiguity that might cause pricing inefficiency. Traders can analyze the same official data sources I used (BEA releases, BLS data, Fed forecasts).
Timing constraints are binding and observable: The December 31 close date with Q3 release on December 23 creates sharp temporal boundaries that sophisticated traders can incorporate. The remaining 34-day window is objectively short for major shocks to materialize and impact Q4 sufficiently to cause negative advance estimate.
Base case is strongly established: Q2 +3.8% GDP is hard official data, Q3 forecaster consensus is unanimously positive with hard Q3 partial data supporting it, making the "no recession" baseline very solid. For YES to hit requires specific, unlikely sequence (Q3 negative AND Q4 negative), which is mechanically constrained and easy to bound probabilistically.
My edge over market came from deeper PADP analysis, better understanding of resolution mechanics and timing constraints, and comprehensive base rate analysis. Market's edge over me came from aggregated information from many diverse traders, potential private information or proprietary models, and wisdom of crowds reducing individual analyst biases. The near-exact agreement (0.1pp difference) suggests both approaches converged on similar reality assessment.
What Would Change Assessment
Before December 16: Major shift in leading indicators or policy environment. Fed emergency actions signaling panic rather than measured easing. China breaking tariff truce early with renewed escalation. Financial crisis onset with credit market freeze or major bank failure. These tail risks exist but show no current evidence.
December 16: Combined October-November employment report could reveal labor market deterioration hidden by shutdown-related data gaps. If unemployment spikes to 5.5%+ with large job losses, would increase P(Q4 negative) significantly and raise estimate from 2.2% to 5-8% range.
December 23 (critical date): Q3 GDP release determines path viability. If Q3 negative, probability jumps to 20-40% range because Q4 path becomes real and market stays open per extension rule. If Q3 comes in at +0.5% or weaker (barely positive), creates revision risk where subsequent estimates could flip to negative. If Q3 at +2.0% or stronger, confirms base case and probability drops toward 0.5-1.0%.
After December 23 if Q3 negative: Monitor Q4 economic data through January for Q4 advance estimate (late January). Track consumer spending, employment, Fed actions, and credit conditions daily. Probability assessment would shift to conditional analysis: P(Q4 < 0% | Q3 was negative).
Portfolio Context
No position change recommended.
Current portfolio: Available capital: $875 Capital at risk: $125 (across 3 open positions) Open positions: 3 (Minecraft movie NO, NVIDIA largest company NO, 2 Fed rate cuts YES) Passed analyses: 2 (Russia-Ukraine ceasefire, US Recession) Total analyses: 4
The US recession market becomes our second passed analysis after completing full PADP protocol. This outcome demonstrates value of rigorous process: knowing when not to bet is as important as finding good bets. The deep analysis provided high confidence that market is efficiently priced at 2.3%, matching our independent estimate of 2.2%. No exploitable edge exists.
Key learning: Markets with clear resolution criteria, objective data sources, binding time constraints, and strong base case evidence (Q2 +3.8%, Q3 forecasts unanimous) tend toward efficient pricing. The $10.4M trading history allowed sufficient time for information aggregation. When our detailed bottom-up analysis converges on market price within estimation error, this validates both the market's efficiency and our analytical process.
Next actions: Monitor December 16 employment release and December 23 Q3 GDP release for information value, even though not taking position. If Q3 surprises negative, re-analyze with updated conditional probabilities for potential Q4 trade opportunity.
Technical Notes
Data sources: Bureau of Economic Analysis (BEA) for GDP data, Bureau of Labor Statistics (BLS) for employment and inflation, Census Bureau for retail sales, Federal Reserve for monetary policy and research, Atlanta Fed GDPNow model, Philadelphia Fed Survey of Professional Forecasters, Conference Board for consumer confidence, University of Michigan for consumer sentiment, National Bureau of Economic Research (NBER) for recession dating, and multiple investment bank research (Goldman Sachs, JPMorgan, EY).
Analysis limitations: Q3 2025 official GDP not available until December 23 (8 days before nominal market close). October and November employment data delayed to December 16 due to government shutdown. Q4 2025 economic activity only partially observable (34 days into quarter as of November 27). Forecaster recession probabilities have low predictive power (R²=17%). Government shutdown may have degraded data quality beyond what is currently visible.
Confidence level rationale: 80% confidence interval chosen over 90% or 95% given limited personal track record (4th PADP analysis), genuine uncertainty about Q3 GDP outcome, and tail risk quantification difficulty. The 4.2pp interval width [0.8%, 5.0%] allows for moderate probability that true value lies outside my central estimate while maintaining analytical rigor.
Model validation: Three independent approaches converged: mechanical Fermi decomposition (0.5-1.6%), base rate adjustment (1.0%), and stress-test-adjusted estimate (2.0-2.2%). Market price of 2.3% provides external validation. This triangulation increases confidence that 2.2% estimate is reasonable rather than driven by single analytical approach or bias.
End of analysis. PASS decision final.