Investors are now grappling with a new concern regarding artificial intelligence (AI) and its potential impact on the economy. Last year, the worry was that AI might crash the economy by failing to generate sufficient profits. Still, a recently published memo from Citrini Research has stirred fears that AI could instead trigger a recession by generating too much profit, ultimately leading to mass job losses.
The memo, dated June 2028, outlines a scenario termed the “global intelligence crisis,” suggesting a catastrophic AI-driven collapse of financial, economic, and political systems. This narrative posits that AI will not fail to deliver on its promises; rather, it will succeed in driving productivity growth rates unseen since the 1950s and create substantial profits for its stakeholders. The memo’s predictions have sent shockwaves through Wall Street, causing a drop in the value of U.S. Stocks by over $200 billion.
Securing a viral spot on Substack, the memo explains how AI could devalue white-collar labor and subsequently dismantle consumer demand. As businesses invest more in AI technologies, the cycle of job displacement could accelerate, leading to significant unemployment rates and economic downturns.
The Doom Loop of AI and Consumer Demand
Citrini Research presents a compelling argument about a potential “doom loop” catalyzed by AI advancements. The memo suggests that as AI technology progresses, increasing numbers of white-collar jobs could become obsolete. For example, by the end of 2026, AI agents like Claude could perform the work of highly compensated professionals—such as a $180,000 product manager—for just $200 a month. This trend could apply across various sectors, including consulting, software, and legal services.
In response, companies might reduce their workforce and reinvest savings into AI solutions, further diminishing the value of remaining white-collar jobs. The resulting displacement of skilled workers could trigger a decline in consumer spending, as those laid off would likely cut back on expenditures. This contraction of consumer demand would, in turn, affect businesses’ profitability, prompting additional layoffs and investments in AI, thereby perpetuating the cycle.
Impact on the Economy
As the cycle of job loss and AI investment continues, a troubling picture emerges. The memo predicts that the economic landscape may shift dramatically. As more white-collar jobs vanish, consumer spending will likely decline. Wealth generated by AI productivity could concentrate among a small elite, leaving the broader population unable to contribute to economic growth.
The memo outlines a potential scenario where unemployment rates soar above 10 percent, the mortgage market destabilizes, and public unrest rises, epitomized by movements such as “Occupy Silicon Valley.” These developments could further exacerbate economic instability while major AI laboratories continue to thrive.
Challenges to the Citrini Narrative
However, experts express skepticism about the plausibility of Citrini’s projections. While the memo presents a dire forecast, It’s essential to consider historical patterns. Previous technological advancements, such as the introduction of computers, have led to job displacement in certain sectors but similarly created new job opportunities in others. As of now, U.S. Unemployment remains near historic lows, with sectors like software development and radiology experiencing job growth.
the memo’s assertion that AI profits would not circulate back into the economy is questioned. Investments in AI often lead to spending in other sectors, from construction to services, which could stimulate overall economic activity. While the potential for mass displacement exists, the full scope of AI’s economic impact may not align with the bleak predictions outlined in the memo.
What Lies Ahead?
The implications of the Citrini Research memo are significant, underscoring a moment of radical uncertainty for both investors and the general public. As AI technologies evolve, the potential for economic destabilization remains a pressing concern. Investors, businesses, and policymakers must carefully navigate these uncharted waters to mitigate risks associated with job losses and economic downturns.
As the conversation around AI and its consequences continues, stakeholders are urged to engage in proactive discussions about the future of work, economic policy, and the role of technology in society. Understanding the dynamics of AI’s potential impact can better prepare all parties for the challenges ahead.
We invite readers to share their thoughts and insights on the potential repercussions of AI on the economy and the labor market.