The Federal Reserve Bank
The Federal Reserve BankiStock

American economists are sounding the alarm over a potential recession next year triggered by Russia's invasion of Ukraine.

According to Fox Business, Goldman Sachs economists warned of the possibility the country may fall into a recession due to the war, with economic growth projections this year decreasing from 2 percent to 1.75 percent.

The projection points to a 20 to 35 percent higher chance of an American recession during the next twelve months.

"While our baseline forecast assumes that further service sector reopening and spending from excess savings will keep real GDP growth positive in the coming quarters, uncertainty around the outlook is higher than normal," they wrote in a Thursday analysis.

The odds of a recession were based on models examining the slope of the yield curve, a essential economic indicator that is central to the transmission of monetary policy, and predicts the fluctuation of interest rates.

“The Fed has never tightened into such a maelstrom before – a shooting war, a pandemic, a weak and wobbly stock market, and an incredibly flat yield curve,” economist David Rosenberg said this week, responding to the Fed raising interest rates for the first time in three years on Wednesday, CNBC reported.

Economic projections released after the Fed meeting indicated that there may be six more similar interest rates increases over 2022, an attempt to tame inflation after consumer price increases hit a 40-year high.

At a post-meeting press conference, Fed Chair Jerome Powell played down economic concerns stemming from the Ukraine war and interest rate hikes.

"The probability of a recession in the next year is not particularly elevated," Powell said. "All signs are that this is a strong economy, and one that will be able to flourish in the face of less accommodative monetary policy."