Kalshi Prediction Markets Match or Beat Traditional Forecasting Tools For Macro Indicators, NBER Study Finds
5 25A new NBER working paper from researchers at the Federal Reserve, Northwestern's Kellogg School and Johns Hopkins finds that Kalshi -- the largest federally regulated prediction market in the U.S., overseen by the CFTC -- produces macroeconomic forecasts that match or beat those of professional forecasters and traditional financial instruments like fed funds futures.
The study compared Kalshi-implied forecasts for the federal funds rate, CPI inflation and unemployment against the New York Fed's Survey of Market Expectations and Bloomberg consensus. Kalshi's modal forecast correctly predicted the federal funds rate on the day before every FOMC meeting since 2022, something neither the survey nor fed funds futures achieved. For headline CPI, Kalshi's median and mode produced a statistically significant improvement over Bloomberg consensus.
Kalshi also fills a gap no other financial market covers: real-time probability distributions for GDP growth, core CPI, unemployment, and payrolls. The paper documented how these distributions shift in response to macro news -- positive CPI surprises moved the mean of the fed funds rate distribution four times more than negative ones. Trading volumes on the platform have grown to nearly 100 million contracts for a single FOMC meeting, supported by liquidity from Susquehanna, Citadel, and Two Sigma.
5 comments
Time of prediction (Score: 5, Insightful)
by larryjoe ( 135075 ) on Monday February 09, 2026 @09:18PM (#65979112)
The New York Fed's Survey of Market Expectations and Bloomberg consensus are surveys filled out 1-2 weeks before the rate announcement. It's not a surprise for a daily Kalshi guess to be more accurate the day before the announcement. It would be more impressive if the Kalshi market were as accurate 1-2 weeks before the rate announcement, as that would be a more apples-to-apples comparison.
Re:Time of prediction (Score: 5, Insightful)
by martin-boundary ( 547041 ) on Tuesday February 10, 2026 @02:53AM (#65979400)
Also, the penalties for insider trading on Kalshi are less severe.
Re: Insider trading (Score: 5, Insightful)
by Mr. Dollar Ton ( 5495648 ) on Monday February 09, 2026 @11:39PM (#65979246)
Yes, we've heard of the amazing returns on investment of the us Congress people, a truly insightful bunch there.
Insider trading? (Score: 5, Insightful)
by sinij ( 911942 ) on Monday February 09, 2026 @10:05PM (#65979162)
There is a large number of people with first-hand privileged knowledge of upcoming events that you could probably make a case that increased accuracy is due to insider trading.
Metrification decreases accuracy (Score: 5, Insightful)
by gurps_npc ( 621217 ) on Monday February 09, 2026 @11:26PM (#65979230)
The second a measuring method becomes officially used, it drops in accuracy.
When something is not official, no one tries to game the system. You get more honest answers and nobody is spending millions/billions of dollars to get the 'right' answer.