Goldman Sachs on Monday updated its own prediction, reporting that a recession is now twice as likely than it had previously forecasted. Earlier this year, the bank estimated that the chance of a recession in the coming year was 15%. Now it’s 30%—and even more likely if you project out another year.

“We now see recession risk as higher and more front-loaded,” wrote a team of economists led by Jan Hatzius in a research report. 

In addition to the 30% estimation for an imminent recession is a 25% chance of entering one a year later if the U.S. avoids one in the near term, the team of economists wrote. Together, those numbers represent a 48% cumulative probability of a recession occurring on a two-year timeline, according to the report.

The reasons for the updated forecast are twofold. The first is that the bank has recently downgraded its GDP growth expectations for the coming year following the Federal Reserve’s recent baseline interest rate increases. Though it continues to expect 2.8% growth in Q2 2022, it downgraded its expectations for the rest of the year and into 2023.

The second is that the bank expects the Fed to continue to respond aggressively to high inflation with similar increases if inflation continues to persist. As a result, the bank sees a strong possibility of negative economic growth in the future.

Earlier this month, the Bureau for Labor Statistics released data that showed inflation had not abated in May, and instead increased to 8.6% following a brief dip in April. In response, the Federal Reserve increased its baseline interest rate last week for the third time this year. The 75-basis-point hike represented the largest since 1994. 

“This increased drag from tighter financial conditions is now somewhat more than we think is necessary to put the economy on a moderately below-potential growth trajectory that would give the Fed the best chance of success,” wrote the team. “It is admittedly hard to be precise with these estimates,” they continued.

In their report, the Goldman Sachs economists also asked: “Why not even higher?” in terms of their recession prediction, acknowledging that today’s commodity prices and Russia’s Ukraine invasion echo conditions that led inflation to become entrenched in the 1970s. 

Despite those echoes, the economists do not believe that wage growth and inflation expectations are as solidified today as they were four decades ago. Instead, the current economy is shifting as a result of relatively temporary events, like pandemic-era wage increases and gas prices skewing inflation expectations. 

If a recession does manifest, what will it look like? 

“Our best guess is that a recession caused by moderate overtightening would be shallow,” the bank’s economists wrote. It might last longer than it should, they added, if a divided government after this fall’s midterm elections stymies coordinated economic policy initiatives. 

“Even shallower recessions have been unpleasant,” they warn.