AI Boom Could Spark 2028 Economic Crisis
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By: Nikhil Pandey
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24 Feb 2025
A forward-looking memo by Citrini Research warns that artificial intelligence could trigger a major economic crisis by 2028
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The report imagines rapid AI growth boosting productivity and corporate profits while unemployment rises above 10 per cent
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It predicts the S&P 500 could fall nearly 40 per cent despite strong headline GDP numbers
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AI systems in the scenario replace many white-collar roles, including coding, research and financial analysis
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Companies cut staff, reinvest savings into automation, and create a cycle of job losses and weaker consumer demand
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The memo calls this a “negative feedback loop with no natural brake”
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It introduces the idea of “Ghost GDP”, where output grows but income increasingly flows to owners of capital rather than workers
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As high earners lose jobs or take pay cuts, consumer spending falls in the largely consumption-driven US economy
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The report also warns that private credit markets and software firms could face stress if revenues weaken
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It argues governments may struggle to respond quickly, as tax systems rely heavily on labour income while AI-driven gains benefit capital
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