Goldman Sachs (GS) continues to lead the charge in sounding the economic alarm bells as a fresh banking crisis rolls through markets and the economy.

The investment bank's chief economist, Jan Hatzius, said Thursday he now sees a 35% chance of a U.S. recession in the next 12 months, up from 25% previously. The increase in odds reflects "increased near-term uncertainty" around the economic effects of small bank stress.

A day earlier, Hatzius cut his 2023 GDP forecast by 0.3 percentage points to 1.2% in a new note out Wednesday afternoon.

The closely watched economist stands alone on Wall Street at the moment in revising forecasts down for GDP, while also raising the odds of a recession amid the banking turmoil.

Recent news flow underscores why Hatzius is trying to get out in front of the potential economic downshift.

Silicon Valley Bank's (SIVB) collapse last Friday marked the second-largest bank failure in the U.S., behind only Washington Mutual during the Great Recession. Signature Bank's (SBNY) demise was the third-largest bank failure in history.

The turbulent situation caused regulators to spring into action to prevent a banking crisis and mass tech layoffs, which is what likely would have happened if left unaddressed, sources have told Yahoo Finance.

Credit Suisse (CS) shares have seen two days of extreme volatility on rising fears of its survival. The investment bank said late Wednesday it would borrow up to $54 billion from the Swiss central bank to shore up investor confidence.

Hatzius thinks that while the banking crisis is a concern, it will not trigger a rate cut from the Federal Reserve. In turn, a recession may unfold as lending standards are tightened and consumers pull back while becoming more jittery about the economy.

"When financial market participants see a higher probability of recession, they are more likely to expect the FOMC to cut the federal funds rate to stimulate the economy. Some market participants also expect the FOMC to cut the funds rate down the road in response to falling inflation, though we are skeptical that it will," Hatzius said.

Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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