() The odds of a U.S. recession are rising ahead of Wednesday’s “Liberation Day,” when President Donald Trump plans to escalate a trade war that has shaken consumer confidence and rattled investors.

Goldman Sachs lifted its forecast Sunday and now sees a 35% chance of a U.S. recession in the next 12 months, up from 20% previously.

The bank’s growing pessimism stems from the recent drop in “household and business confidence” and statements from the Trump administration suggesting the White House is prepared to tolerate “near-term economic weakness in pursuit of their policies,” according to a research note.

“While sentiment has been a poor predictor of activity over the last few years, we are less dismissive of the recent decline because economic fundamentals are not as strong as in prior years,” Goldman economists noted.

Mark Zandi, the chief economist for Moody’s Analytics, also raised his recession odds over the weekend. Zandi pegs the probability of a U.S. recession sometime this year at 40%, up from 15% at the start of 2025.

“The intensifying trade war and DOGE cuts are behind all this, and with last week’s announcement of big tariff increases on vehicle imports and the coming reciprocal tariffs, things are sure to get worse,” Zandi wrote in a Sunday post on X.

While both updated forecasts show a worsening outlook, they suggest a recession is still less likely than not.

Zandi said that’s only because of the labor market, where layoffs remain low and job and income growth are both positive.

Other prominent economists, like former Treasury Secretary Larry Summers, are even less optimistic and think it’s a toss-up whether the U.S. will enter a recession.

“I am convinced there is nearly a 50 percent chance of recession, and maybe even a far greater risk of recession, unless the current policy approach of tariff threats lurching is altered,” Summers wrote earlier this month.

Trump insists that his tariffs which include a 25% tax on auto imports will bring jobs back to the U.S. Economists are skeptical of that claim and warn that consumers will see higher prices.

Americans are worried too, as evidenced by the recent plunge in consumer confidence, which has fallen to its lowest level since January 2021.

The growing economic uncertainty is part of the reason the Federal Reserve kept its benchmark interest rate unchanged at its meeting earlier this month. Policymakers now expect the U.S. economy to grow 1.7% this year, slower than earlier projections.

Fed Chair Jerome Powell said Trump’s tariffs could stall the central bank’s progress in the battle against inflation, which remains above the 2% target.

“I think we were getting closer and closer” to price stability, Powell said. “I do think with the arrival of the tariff inflation, further progress may be delayed.”