Goldman Sachs sees the Federal Reserve acting aggressively to tighten monetary policy through the rest of the year.
That has Goldman cutting its U.S. Gross Domestic Product for 2023 and sees the unemployment rate rising higher than previously expected.
In a note released late Friday, Goldman now sees GDP growth of 1.1% next year, down from its prior call for 1.5% growth from the fourth quarter of 2022 to the end of 2023.
The Federal Reserve has shaken the markets as it implements huge rate hikes in an effort to moderate the steepest inflation in 40 years.
The Fed meets again this week and another big interest rate hike is on the table, after the consumer price index report came in hotter than expected.
Goldman now expects a 75 basis point hike, up from 50 basis points previously and sees 50 bp hikes in November and December, with the fed funds rate peaking at 4-4.25% by the end of the year.
"This higher rates path combined with recent tightening in financial conditions implies a somewhat worse outlook for growth and employment next year," Goldman wrote.
The projection for the unemployment rate is to rise to 3.7% by year-end, up from 3.6%, and rising to 4.1% by the end of 2023, from 3.8% previously.
Reuters contributed to this report.