The likelihood that the United States will experience an economic recession at some point over the next year has risen to a 40-year high, according to a probability model created by the New York Federal Reserve.

The probability of a recession now stands at 68.2 percent, the highest level since 1982. This means it has now surpassed its November 2007 level, which was recorded shortly before the credit crunch at 40 percent.

The model relies on analyzing the difference between the yields of three-month and 10-year U.S. Treasury bonds. In recent months, projections have also indicated a slowdown in real GDP growth and weakening of the labor market within the United States.

Given the turbulence in the banking sector triggered by the collapse of Silicon Valley Bank, Federal Reserve economists are now forecasting a mild recession.

“Given their assessment of the potential economic effects of the recent banking-sector developments, the staff’s projection at the time of the March meeting included a mild recession starting later this year, with a recovery over the subsequent two years,” read the minutes from a March meeting of the Federal Open Market Committee (FOMC).

Former Treasury Secretary Larry Summers has also expressed his view that the odds of a downturn are “probably about 70 percent.”

“The chance that a recession will have begun this year in the U.S. over the next 12 months is probably about 70 percent,” Summers said in a recent interview with Foreign Policy. “As I put together the lags associated with monetary policy, the credit crunch risks, the need for continuing action around inflation, the risk of geopolitical or other shocks affecting commodities, 70 percent would be the range that I would be in.”

The projection represents merely the latest piece of bad news for the Biden presidency. Last month, a poll found that around 70 percent of Americans have admitted to feeling stressed about their personal finances at present. The CNBC poll, conducted in partnership with Momentive, found that of the seven in 10 people who admit to feeling stressed, a further 58 percent of people say they are living paycheck to paycheck.

As economic headwinds worsen, a similar report last month discovered that small businesses throughout the country are currently filing for bankruptcy at a record pace, exceeding the levels observed in 2020 at the height of the coronavirus pandemic.

UBS Evidence Lab noted at the time that the four-week moving average for private filings was 73 percent higher than it was in June 2020 and warned the situation may worsen as the repercussions of the recent banking crises start to manifest.

“[We] believe one of the more underappreciated signs of distress in U.S. corporate credit is already emanating from the small- and mid-size enterprises sector,” Matthew Mish, head of credit strategy at UBS, wrote in the memo. “[The] smallest of firms [are] facing the most severe pressure from rising rates, persistent inflation and slowing growth.”

Meanwhile, the administration has also confirmed plans to raise the corporate income tax rate to 28 percent later this year — a move that will likely increase pressure on small businesses already struggling under the pressures of inflation and changes in the wider economy.