Peter Schiff Warns AI Bubble Burst Could Trigger Recession, But Prediction Markets Disagree

Cryptocurrency speculators are not betting on a US recession in 2026, but see a higher risk of one in 2027.

Will the US Economy Contract?

The betting crowd on Polygon-based Polymarket puts the probability of a recession this year at just 7%, a sharp drop from a 2026 high of 37% in March.

For the outcome to be judged "yes," the economy must record two consecutive quarters of negative growth.

The US Bureau of Economic Analysis has yet to release an advance estimate for third-quarter GDP, and fourth-quarter GDP data will not be available for several more months.

Still, the probability of a recession in 2027 is notably higher, at 35%.

Schiff Warns Recession Is "Imminent"

That probability coincides with warnings from economist Peter Schiff, who cautioned that rising borrowing costs could impact AI investment and expose broader economic weakness.

He added that an "imminent" recession would support gold and gold-mining investments, although both are currently falling alongside AI-related assets.

Investors worry that AI capital expenditures will slow as borrowing to fund expansion becomes more expensive and scarce. Gold and gold-mining stocks are also declining, but since AI capex is the only factor keeping GDP growth positive, the coming recession is extremely bullish for gold and gold miners.

— Peter Schiff October 22, 2026

Schiff's views align with concerns raised by former Fed advisor Danielle DiMartino Booth, who said a recession may have already begun as Treasury yields fall and credit stress expands among AI spenders.

Schiff also warned that inflation, economic weakness, and rising Treasury yields could trigger a market crash before the midterm elections.