AI could trigger a recession, says new report
Citrini Research's latest memo says the rapid rise of AI might actually push the US into a recession.
While companies are seeing record productivity and saving money by automating jobs in fields like coding, financial advice, tax prep, routine legal work, travel booking, and other white-collar tasks, there's a catch—fewer people working means fewer people spending.
Unemployment could top 10%
The report presents a scenario in which unemployment could top 10% as AI takes over more white-collar roles.
With real wages dropping and consumer spending (which drives most of the US economy) shrinking, even the S&P 500 is expected to fall sharply—down 38% from its peak, in the memo's 2028 scenario.
'Ghost GDP'
As companies chase profits with even more automation, they lay off more workers, which leads to even wider margins and faster adoption of AI—a cycle that keeps repeating.
Machines don't buy things like humans do ("ghost GDP"), so demand for everyday goods drops.
Plus, $13 trillion in home loans could be at risk if professionals lose steady income.
Broader economic impact
Private equity-backed software firms are struggling as AI agents begin to bypass some of them, leading to a spike in loan defaults.
Government revenues are eroding and policymakers are struggling to respond—all signs that the economic impact of AI goes way beyond just new tech in the workplace.