{"id":236618,"date":"2025-12-29T12:57:01","date_gmt":"2025-12-29T17:57:01","guid":{"rendered":"https:\/\/ibkrcampus.com\/campus\/?p=236618"},"modified":"2025-12-30T04:36:48","modified_gmt":"2025-12-30T09:36:48","slug":"a-cheaper-way-to-hedge-recession-job-losses","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/forecast-trader\/a-cheaper-way-to-hedge-recession-job-losses\/","title":{"rendered":"A Cheaper Way to Hedge Recession, Job Losses: Dec. 29, 2025"},"content":{"rendered":"\n<p><\/p>\n\n\n\n<p>Our Forecast Trader participants price out a <a href=\"https:\/\/forecasttrader.interactivebrokers.com\/eventtrader\/#\/market-details?id=726203920%7C20270325%7C0%7CQ4%202026&amp;detail=contract_details\">41%<\/a> chance that the US economy will enter a technical recession by the end of 2026, defined as two consecutive quarters of declining real gross domestic product on an annualized, seasonally adjusted, quarter-over-quarter basis. But a cheaper way to hedge an economic downturn would be to purchase \u201cYes\u201d contracts on December 2026 US unemployment at the <a href=\"https:\/\/forecasttrader.interactivebrokers.com\/eventtrader\/#\/market-details?id=573031117%7C20270108%7C4.7%7CDecember%202026\" target=\"_blank\" rel=\"noreferrer noopener\">4.7%<\/a> and <a href=\"https:\/\/forecasttrader.interactivebrokers.com\/eventtrader\/#\/market-details?id=573031117%7C20270108%7C5.2%7CDecember%202026\">5.2%<\/a> levels, which cost just $0.09 and $0.02, respectively, and are significantly undervalued in my opinion. The reason that recession and unemployment contracts go hand in hand is because when looking back at history, joblessness has always increased when recession hits (see chart below). Furthermore, unemployment is one of the criteria used by the National Bureau of Economic Research for calling a recession. Other factors include the following:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Real personal income less transfers<\/li>\n\n\n\n<li>Nonfarm payroll employment<\/li>\n\n\n\n<li>Real personal consumption expenditures<\/li>\n\n\n\n<li>Manufacturing and trade sales adjusted for price changes<\/li>\n<\/ul>\n\n\n\n<p>In consideration of a current unemployment rate of 4.6%, it\u2019s heavily likely to rise above 4.7% if recession hits next year. 5.2% is a different story, but that\u2019s also a cheap hedge that is available for just $0.02.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" width=\"1050\" height=\"765\" data-src=\"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/Picture1-14.jpg\" alt=\"correlation of unemployment and recessions\" class=\"wp-image-236628 lazyload\" data-srcset=\"https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/Picture1-14.jpg 1050w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/Picture1-14-700x510.jpg 700w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/Picture1-14-300x219.jpg 300w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/Picture1-14-768x560.jpg 768w\" data-sizes=\"(max-width: 1050px) 100vw, 1050px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1050px; aspect-ratio: 1050\/765;\" \/><\/figure>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1100\" height=\"81\" data-src=\"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/Picture2-13-1100x81.jpg\" alt=\"IBKR ForecastTrader Contract asking is US will enter recession by end of q4 2026\" class=\"wp-image-236629 lazyload\" data-srcset=\"https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/Picture2-13-1100x81.jpg 1100w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/Picture2-13-700x52.jpg 700w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/Picture2-13-300x22.jpg 300w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/Picture2-13-768x57.jpg 768w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/Picture2-13.jpg 1391w\" data-sizes=\"(max-width: 1100px) 100vw, 1100px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/81;\" \/><\/figure>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1100\" height=\"81\" data-src=\"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/Picture3-13-1100x81.jpg\" alt=\"IBKR ForecastTrader Contract asking if US unemployment rate will exceed 4.7% in December 2026\" class=\"wp-image-236630 lazyload\" data-srcset=\"https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/Picture3-13-1100x81.jpg 1100w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/Picture3-13-700x51.jpg 700w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/Picture3-13-300x22.jpg 300w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/Picture3-13-768x56.jpg 768w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/Picture3-13.jpg 1391w\" data-sizes=\"(max-width: 1100px) 100vw, 1100px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/81;\" \/><\/figure>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1100\" height=\"81\" data-src=\"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/Picture4-9-1100x81.jpg\" alt=\"BKR ForecastTrader Contract asking if US unemployment rate will exceed 5.2% in December 2026\" class=\"wp-image-236631 lazyload\" data-srcset=\"https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/Picture4-9-1100x81.jpg 1100w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/Picture4-9-700x51.jpg 700w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/Picture4-9-300x22.jpg 300w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/Picture4-9-768x56.jpg 768w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/Picture4-9.jpg 1393w\" data-sizes=\"(max-width: 1100px) 100vw, 1100px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/81;\" \/><\/figure>\n\n\n\n<p><em>Source for images: ForecastEx<\/em><\/p>\n\n\n\n<p><em>Note: Prices are highest bids as of the morning of Dec. 29, 2025.<\/em>&nbsp;<\/p>\n\n\n\n<p><em>To learn more about ForecastEx, view our Traders\u2019 Academy video&nbsp;<\/em><a href=\"https:\/\/www.youtube.com\/watch?v=ceR-weGZSXc\" target=\"_blank\" rel=\"noreferrer noopener\"><strong><em>here<\/em><\/strong><\/a><\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Our participants price out a 41% chance that the US economy will enter a technical recession by the end of 2026, defined as two consecutive quarters of declining real gross domestic product on an annualized, seasonally adjusted, quarter-over-quarter basis. <\/p>\n","protected":false},"author":903,"featured_media":223537,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18929,18,6,8,9,26,3],"tags":[674,1117],"contributors-categories":[13760],"class_list":{"0":"post-236618","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-forecast-trader","8":"category-macro","9":"category-north-america","10":"category-region","11":"category-securities","12":"category-text-articles","13":"category-traders-insight","14":"tag-employment","15":"tag-recession","16":"contributors-categories-ibkr-macroeconomics"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v27.4) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>A 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