TDP #49: Will Unemployment Rate Decrease This August?
See what's trending—before it happens.
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✍️ Editor’s note:
Welcome to a new week in The Daily Prediction!
Just last week, the July jobs report delivered an additional 73,000 jobs, but the unemployment rate was still slightly higher (4.2%). This comes amidst an all-items Consumer Price Index (CPI) anticipation of 2.7% for July.
Do these numbers say that the economy is still teetering on the edge of a downturn? Let’s consult the prediction crowd’s wisdom (and of course, those of the true analysts).
— The Daily Prediction Team
👷 Unemployment Rate Climbs Slightly Higher in July
Unemployment rate in the United States ticked up from 4.1% in June to 4.2% in July. It’s not a big jump, but it’s still slightly above expectations.
This is just a modest increase, but it’s still leading to considerable discussions, especially given the significantly weaker-than-expected job growth of only 73,000 nonfarm payrolls in July. It suggests a notable cooling in the labor market.
As such, prediction markets are speculating about the unemployment rate this August. Kalshi traders are predicting that it will increase for the second straight month.
Manifold traders are also predicting whether the unemployment rate will reach 5.5% in 2025. They’re giving it a 17% chance. It’s not a high probability, but it is still noticeably higher than the 13% probability at the start of July 2025.
Meanwhile, you can go to Polymarket to predict the number of jobs to be added this month. The consensus (39%) stands at 50k-100k additional jobs, with the 100k-150k range in close second (31%).
🗣️ What the Analysts Say
The Financial Forecast Center targets a 4.2% unemployment rate in August, with a confidence interval of +/- 0.1%. The Philadelphia Fed Q2 2025 survey predicts an average US employment rate of 4.3% for 2025, rising to 4.5% by Q1 of 2026.
Per Bankrate’s Economic Indicator Survey, most economists expect unemployment to peak at 4.5% in 2025, with only a 25% chance of a recession by March 2026.
The Guardian highlighted intensifying concerns amid trade tensions between the Trump administration and other countries. The Economic Times said that the July jobs report has “set off alarm bells across financial markets”, with slowing hiring and rising unemployment.
Is there something big to worry about? Probably not so much.
Unemployment has stayed within a narrow 4.0%-4.2% band since May 2024. July 2025’s rise to 4.2% keeps that trend intact. Most analysts still anticipate the unemployment rate to stabilize.
However, there are key risks to watch out for, including tariff-induced uncertainties, slower payroll growth, and inflation persisting near 3%.
📉 How High Will Inflation Get in 2025?
Speaking of inflation, how high will it get in 2025?
The latest official data from the Bureau of Labor Statistics (BLS) was released in mid-July 2025. The Consumer Price Index (CPI) for all items increased 2.7% for the 12 months ending June 2025. Meanwhile, the core CPI, which excludes volatile food and energy prices, rose 2.9% over the same 12-month period.
Prediction markets are actively pricing in various inflation scenarios for 2025. On Polymarket, traders are getting anxious about inflation rising to above 4%. The majority is still hovering at the 3% range, though.
On Kalshi, the 3% CPI market is already resolved to a “Yes”. That leaves the 4% range as the frontrunner, with a 17% probability.
🗣️ What the Analysts Say
Trading Economics projects the inflation rate in the US to be around 2.7% for July 2025 and 2.91% for August 2025. Their forecasts on core inflation show similar stability in the higher 2% to low 3% range.
The Federal Reserve Bank of Cleveland’s Inflation Nowcasting mirrors this sentiment. As of August 4, 2025, they peg a 2.72% inflation rate for July 2025 and 2.81% for August 2025.
Meanwhile, RBC Capital Markets expects both headline and core CPI to reach above 3% by the end of 2025.
These forecasts largely converge on inflation remaining above the Federal Reserve’s 2% target for 2025. The latest actual CPI data for June actually sits within the range of these forecasts, suggesting that the current inflationary pressures are persistent.
Oh, and if you’re interested in the global economy, the International Monetary Fund (IMF) projects global inflation to decline from 5.9% in 2024 to 4.5% in 2025. Just something to look at. 👀
🦄 A message from Groovy Market
🧐 Punting on the Peculiar
Warning, though: This list isn’t for everyone!
👱 Trump Presidency
Who will Trump meet with in August? (Polymarket)
Who will Trump pardon in 2025? (Polymarket)
Who will Trump nominate as Fed Chair? (Kalshi)
🎭 Culture
Who will be the world's first trillionaire? (Kalshi)
Will Timothée Chalamet and Kylie Jenner get married by the end of August 2025? (Manifold)
Who will win Love Island UK Season 12? (Women) (Polymarket)
