Goldman Sachs is telling clients there is a 15% chance of a recession in the next 12 months and 35% within 24 months. This is according to a client note from Goldman Sachs Chief Economist Jan Hatzius, Bloomberg reports.

The investment bank is basing its warning on eight potential interest rate hikes by the Federal Reserve in 2022. In the 14 tightening cycles since World War II, a recession has occurred 11 times, Hatzius notes.

"Our analysis of historical G10 episodes suggests that although strong economic momentum limits the risk in the near term, the policy tightening we expect raises the odds of recession," Hatzius writes. "Taken at face value, these historical patterns suggest the Fed faces a narrow path to a soft landing as it aims to close the jobs-workers gap and bring inflation back to its 2% target."

Inflation is now at 8.5% in the United States, and the March producer price index for wholesaling reached 11.2% for the trailing 12 months.

"We do put some weight on the historical patterns [of the labor market] and believe that the overheating of the labor market has raised the risk of recession meaningfully," Hatzius adds. "The yield curve seems to discount a recession probability in 2023 of about one in three, roughly double the unconditional average, and we would broadly concur with this assessment."