The AI Doomsday Scenario That Sent Shockwaves Through US Markets

US stock markets faced a new round of volatility this week, and it was driven by, although speculative, concerns regarding the significant and possibly devastating effect that artificial intelligence (AI) is expected to have on the US economy. This was set off by a viral article from Citrini Research, a relatively unknown firm that specializes in analyzing megatrends, which presented a dismal scenario regarding how the US economy is expected to collapse within the next five years because of AI.

The Viral Scenario: A Vision of an AI-Driven Apocalypse

The article published by Citrini Research on Substack has raised market fears about the future from now until June 2028. The scenario is about a world where “agents,” or autonomous AI systems, disrupt all aspects of the US economy. The rapid advancement of AI technology has led to massive unemployment among the white-collar population and a financial crisis.

The scenario starts with the development of AI technology to the point where its general intelligence is beyond human intelligence, changing everything instantly. By the end of this period, the United States is in a situation where its unemployment levels have risen to over 10%, and a protest movement similar to Occupy Wall Street has formed outside the offices of leading AI companies such as OpenAI and Anthropic, dubbed “Occupy Silicon Valley.” The situation is portrayed as unavoidable, with a series of events happening in a feedback loop.

How the Scenario Unfolds

Mass White-Collar Unemployment

Contrary to traditional narratives that posit technological progress creates new jobs, Citrini’s scenario predicts AI will obliterate many white-collar roles. The reasoning is that AI, as a form of general intelligence, can perform tasks that previously required human expertise, including coding, management, and creative work.

For example, displaced software developers—no longer needed to write code—are pushed into gig economy jobs like driving for Uber. This influx of formerly salaried workers into unstable, low-wage sectors depresses wages, further reducing consumer spending. With less demand, companies cut back on labor and instead pour resources into AI development and deployment, fueling the cycle.

“The Feedback Loop with No Natural Brake”

This creates a “feedback loop with no natural brake,” as Citrini puts it. This cycle continues with the job cuts leading to a decrease in consumer spending, which in turn causes companies to invest even more in AI to reduce costs, leading to further job cuts. This cycle continues with demand decreasing in all industries, and the markets trembling due to the effects of reduced revenues and asset devaluations.

Financial Turmoil and Market Collapse

This is exactly what Citrini’s scenario predicts: a 57% collapse in the S&P 500 index in late 2027 due to a mortgage market meltdown and private credit defaults. As jobs are lost, people are unable to pay their mortgages, and the value of mortgage-based assets decreases. At the same time, the private credit markets, which financed many tech acquisitions based on projections of future revenues, collapse due to the disruptions in the market caused by AI technologies.

The scenario emphasizes that traditional financial policy tools—like adjusting interest rates—are ineffective because the root cause isn’t monetary policy but a fundamental shift in the economy’s productivity and value creation. The result is a systemic crisis that the government cannot easily contain or resolve.

The Illusion of Growth: Ghost GDP and Social Unrest

In spite of the economic slump, it has also been noted in the scenario that the AI businesses and tech giants would continue to earn phenomenal profits. This has created a paradox where the economic growth looks healthy on paper but in reality, most of the economic activities are “Ghost GDP” or economic activities that are reflected in economic growth but are not reflected in the real economy.

This has created social unrest as the wealth created through economic productivity through AI technology has not trickled down to the common man. The scenario has also noted an increase in social movements such as the Occupy movement, where protesters are targeting the offices of AI businesses, thereby creating a divide between the economic “elites” and the common man.

The Role of AI in Accelerating Economic Disruption

AI as a Frictionless Force

Citrini’s scenario underscores how AI agents, with their rapid capabilities, eliminate much of the friction that traditionally sustains economic transactions. Examples cited include AI systems like Anthropic’s Claude Code and OpenAI’s Codex, which are capable of performing complex tasks that once required human labor.

This technological leap means businesses can automate tasks such as customer service, workflow management, and even complex decision-making, at a fraction of previous costs. Companies like Oracle face a “race to the bottom” as AI-driven solutions erode long-term contracts and profit margins.

Disintermediation and Market Fragmentation

At the consumer level, AI assistants act as middlemen in sectors such as travel, property, and food delivery. Rather than ordering from a travel agent or DoorDash, consumers write their own apps or use AI-powered personal assistants that conduct transactions in cryptocurrencies, cutting out payment middlemen such as Visa or Mastercard.

This disintermediation causes market fragmentation and wrecks traditional profit streams, hastening the collapse of the old business models. The stock price of Uber, DoorDash, and payment leaders has already dropped this week.

Ripple Effects: Credit Defaults and Housing Crisis

Private Credit Defaults

Financial institutions that provided funding for acquisitions in the tech industry, such as the $10.2 billion acquisition of Zendesk, now face huge financial losses due to disruption in revenue models by AI. This is because loans are taken based on future earnings, and if AI leads to a decrease in those earnings, it results in the largest default in credit history.

Mortgage Meltdown

At the same time, many people are unable to pay off mortgages because they are not able to work in traditional white-collar jobs. This results in a defaulting housing market, which further fuels the economic crisis.

The Paradox of AI-Driven Growth and Societal Decay

In the scenario developed by Citrini, we find a rather dismal picture of a world where the development of AI technologies has led to unprecedented levels of productivity growth but also to massive levels of unemployment, social unrest, and economic instability. We also find here a brand new concept: “Ghost GDP.” In this case, we are talking about a reality where the economic growth on paper far surpasses the tangible reality in which we live and operate.

This has led to massive social unrest in the form of demonstrations and movements that demand a fair share of the wealth created by these AI technologies. The scenario ends on a rather ominous warning: “This is new territory, and our frameworks are not adequate to deal with the kind of change AI might bring.”

Market Reactions and Expert Commentary

The release of this scenario has caused immediate jitters in US markets. The S&P index has fallen over 1% on Monday, with software stocks sinking to levels not seen since April. Major tech and finance stocks such as Uber, American Express, Mastercard, and DoorDash all plummeted.

Neil Wilson, an analyst at Saxo Capital Markets, dismissed the scenario as “doomsday porn,” emphasizing that it’s speculative and unlikely to unfold exactly as depicted. However, he acknowledged that it serves as a “wake-up call” about how rapidly the economy is evolving and the potential for unintended consequences.

Stephen Innes, managing partner at SPI Asset Management, noted that AI thought pieces have become market influencers, even if the scenarios are exaggerated.

Broader Implications: A New Economic Framework?

Citrini’s scenario raises profound questions about the future of economic policy, societal stability, and the role of AI. It warns that the current economic frameworks are ill-equipped to handle a world where AI substantially reduces the scarcity of human intelligence, collapsing the traditional supply-and-demand dynamics.

The report concludes with a call for “new frameworks” to manage this transition—before the “feedback loop with no brake” spirals out of control.