Citrini’s Dystopian AI Vision Draws Global Investor Criticism

The idea from Citrini Research that artificial intelligence will trigger widespread unemployment is prompting a global backlash from investors and economists.

In the past few days, experts from Citadel Securities, Deutsche Bank AG, Fidelity International, Liontrust Asset Management Plc and others have said the thesis is far-fetched at best, with a top White House economist even calling it “science fiction.”

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Citrini itself has cautioned against taking the report too literally, writing in the second sentence of the 7,000-word Substack post that “what follows is a scenario, not a prediction.”

Still, even as a thought experiment, the doomsday narrative has taken Wall Street by storm this week and triggered more losses in software and financial stocks. With investors already edgy about the power of AI tools, the report added fuel to the fire with its vision of a world where AI causes mass white-collar layoffs, a stock-market collapse and drives the unemployment rate above 10%.

In particular, critics have zeroed in on Citrini’s thesis that AI will cause a negative feedback loop, dubbing it a “human intelligence displacement spiral,” in which companies invest in more AI and fewer workers. Since those laid-off workers aren’t spending as much, the pressure of profit margins causes companies to adopt even more AI, and then the cycle repeats.

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Some of the market anxiety caused by Citrini is already easing. Nasdaq futures are pointing to a 0.4% advance when U.S. markets open, which would add to Tuesday’s 1.1% rally. The rebound in global stocks was helped by comments from Anthropic PBC, which said it plans to build partnerships — suggesting that its Claude chatbot will integrate with, rather than displace, existing businesses.

According to Citadel Securities, current data show little sign of widespread AI-driven labor disruption, citing surveys from the St. Louis Fed and labor market indicators. Job postings for software engineers — a field seen as vulnerable to automation — have jumped in recent months, and construction hiring appears to be picking up, supported by a boom in AI-related data center projects, wrote macro strategist Frank Flight in a report.

Instead of replacing human workers, “it seems more likely that AI will be a complement” for labor in many areas, similar to past technological revolutions, he said. “To frame this debate correctly, one can simply ask: was the advent of Microsoft Office a complement or a substitute for office workers?” Flight added.

That’s a view echoed by Clare Pleydell-Bouverie, co-head of the Liontrust Global Innovation team. New technology will eliminate some jobs, but also create new ones, she said.

“In Silicon Valley right now, there are new jobs that didn’t exist two years ago. Prompt engineers, inference optimization experts. So we do think that there will be some good news in this as well,” she added.

One of the problems with Citrini’s vision coming true is that human interaction may be critical in a lot of jobs, essentially giving non-AI businesses a competitive advantage, according to Krishna Guha, head of central bank strategy at Evercore. As well, there are limits on how fast AI can expand given the energy constraints, he said.

“Even if the tech and microeconomics were to evolve in line with this scenario, it is highly unlikely that the macro would, as this would require a set of extreme and improbable conditions to hold,” Guha wrote.

Here’s what others have also said:

Pierre Yared, the acting chair of the White House Council of Economic Advisers

“The Citrini report is an interesting piece of science fiction — and I like science fiction,” Yared said in a brief interview after speaking at the National Association for Business Economics in Washington. “But I think that if you really look at it, and think long and hard about it, it violates some of the basic accounting in economics.”

“AI can either be a groundbreaking innovation that increases production, increases income” and expenditure, “or it can be an innovation that ends up not delivering on its promise.”

Salman Ahmed, global head of macro at Fidelity International

He said political leaders would take action to protect workers being displaced by AI. As well, the adoption of more AI tools is likely to be gradual because it’s energy-intensive and many software systems are already deeply integrated with corporate operations.

“Politicians are not stupid people,” Ahmed said. “Ultimately the unemployment rate has an impact on policymaking. If there’s a runaway technology which can do everything — and we are not there yet — then who’s going to pay taxes? Are robots going to pay taxes?”

“You have natural constraints in the system,” he said, that would limit a sudden labor-market shock.

Ed Yardeni, founder of Yardeni Research

“AI is artificial but not intelligent. The output of LLMs sounds intelligent, but these models don’t have a clue about what words actually mean.”

“The AI story has morphed from a Roaring 2020s productivity booster to an existential threat to our way of life. We continue to believe that AI is augmenting workers’ productivity rather than making them extinct.”

Jim Reid, Deutsche Bank’s global head of macro research and thematic strategy

“The argument leans heavily on narrative and emotion rather than hard evidence. That doesn’t mean it will ultimately be wrong, but in both cases the vibes to substance ratio is undeniably high. I’ll stop there, before anyone accuses my own research of the same thing.”