A viral AI doomsday report has sent stock prices spiralling – Here’s what the experts say
A provocative research report from Citrini Research has gone viral, painting a chilling picture of an AI-driven economic apocalypse.
Released over the weekend, the report, titled The 2028 Global Intelligence Crisis, envisions a future where artificial intelligence’s rapid success leads to mass white-collar layoffs, plummeting consumer spending, and a devastating stock market crash by 2028.
The hypothetical scenario, framed as a retrospective from June 2028, warns of double-digit unemployment reaching 10.2% and the S&P 500 plunging 38% from its 2026 highs, triggered by an “AI feedback loop” with no natural brakes.
On Monday, (23 February) software stocks took a nosedive, with enterprise software firms like those in payments and delivery sectors suffering heavy losses. DoorDash, American Express, KKR, and Blackstone all dropped over 8%, contributing to the Dow Jones Industrial Average’s worst day in months, shedding more than 800 points.
Investors, already jittery from ongoing AI hype, reacted swiftly to the note’s dire warnings, amplifying fears that AI’s productivity gains could paradoxically “eat the economy” by displacing high-earning jobs and creating a vicious cycle of reduced spending and further firings.
Citrini Research’s original viral post
What does the report say?
Co-authored by Citrini’s James van Geelen and Alap Shah of Lotus Technology Management, the analysis isn’t a firm prediction but a ‘thought exercise’ exploring the risks of unchecked AI adoption.
It highlights how AI could disrupt not just software and consulting but broader sectors, leading to defaults on loans tied to white-collar borrowers and a contraction in ‘ghost GDP’, economic activity propped up by inefficient human labour that AI renders obsolete.
Shah, responding to the market panic, admitted the reaction ‘far exceeded expectations’ and urged governments to consider taxing AI to mitigate a potential ‘cycle of unemployment’, estimating white-collar job losses could hit 5% in the next 18 months.
What economists are saying
But not everyone is buying into the doom and gloom. Top economists and business leaders have weighed in, offering a mix of caution, skepticism, and calls for measured response.
Claudia Sahm, Chief Economist at New Century Advisors, critiqued the report for emphasising AI’s ‘destructive’ side over its ‘constructive’ potential, noting that a labour market crisis would likely prompt aggressive fiscal and monetary interventions, something the report downplays.
“The more likely scenario of gradual, limited job losses will be the hard one to get policymakers to focus and act,” Sahm posted on X.
Investor Michael Burry, famous for foreseeing the 2008 housing crash, amplified the report on X with a wry comment: ‘And you think I’m bearish’, sharing a chart of the AI feedback loop.
Michael Burry weighs in
Brendan Duke from the Center on Budget and Policy Priorities pointed out an underappreciated risk: financial stress from defaults by ‘prime white-collar borrowers who nobody ever thought would default’, which could ripple into mortgages and private credit.
On the skeptical side, Jeff Dorman, chief investment officer at Arca, dismissed the frenzy as ‘doom porn’, arguing that fear sells but rarely materializes. “There are thousands of successful macro newsletters that you pay money to subscribe to, and all of them tell you to buy gold, build a bunker, and short stocks,” he said on X.
Deepak Shenoy of Capitalmind echoed this, comparing it to past false alarms like 2008 oil reserve scares: “Doomsday porn is addictive. AI based end of everything is the WWF of the world now, fun to watch but is mostly fake.”
Citrini itself defended the market’s response, stating on X that the sell-off isn’t an overreaction but a delayed recognition of AI’s current capabilities.
Rise of the ‘scare trade’
Analysts warn the ‘AI scare trade’ is far from over, spreading from initial software hits to finance, real estate, and beyond, as generative AI tools like those from Anthropic automate roles once deemed irreplaceable.
Top economists urge swift policy interventions, such as AI taxes or retraining programs, to avert a full-blown intelligence crisis, but sceptics counter that oversold levels signal a potential rebound if earnings from Nvidia and others this week defy the doom.
While the report stresses it’s a ‘thought exercise’ rather than a prediction, its timing amid AI hype has made it a focal point for fears that technological abundance could paradoxically undermine the consumption-driven economy.
