Citrini Research published a report in February on a potential doomsday scenario in which AI-fueled job losses trigger a stock market crash and a recession in 2028. The Citrini Scenario, as it is now being referred to, is now seeing millions of dollars in trading at prediction market platforms. So, just what is the prediction, and how likely is it to come to fruition?
“What follows is a scenario, not a prediction. This isn’t bear porn or AI doomer fan-fiction. The sole intent of this piece is modeling a scenario that’s been relatively underexplored,” stated the report titled “The Global Intelligence Crisis.”
Prediction market users are seeing it as a prediction now. Kalshi’s market has seen almost $15 million in trading.
It’s now seeing trading volume of over $1 million per day and was the most popular non-sports, non-crypto market on March 30. As a result of the high trading volume, the likelihood of the scenario has increased from 12% when the market opened last month to 34% today.
The Scenario
The scenario describes a rapid economic crisis triggered by AI, which makes human labor, especially white-collar jobs, largely obsolete.
This then leads to a private credit and mortgage crisis. High unemployment also affects major companies that rely on consumer spending, such as Uber, American Express, Mastercard, and DoorDash.
Corporations attempt to manage the crisis by increasing investment in AI, which creates a cyclical pattern.
“When cracks began appearing in the consumer economy, economic pundits popularized the phrase “Ghost GDP:’ output that shows up in the national accounts but never circulates through the real economy,” said the report, which is written as a post-mortem in 2028.
Protestors occupy corporate headquarters in Silicon Valley, campaigning against the reliance on AI. As the report notes, the “Occupy Silicon Valley” movement is “emblematic of wider dissatisfaction.”
Kalshi stated that for its market on the “Citrini scenario” to resolve to “yes,” three of these outcomes must occur:
- Unemployment rate exceeds 10% (monthly BLS)
- S&P 500 declines more than 30% from its closing level on issuance
- Zillow Home Value Index declines more than 10% YoY in NYC, LA, San Francisco, Chicago, Houston or Phoenix
- Labor share of gross domestic income (GDI) first-release value for any quarter falls below 50%
- CPI-U YoY falls below 0% in any monthly release
What’s Driving Spike in Trading Volume?
The market has attracted more interest since the start of the Iran war. Markets on Polymarket about the conflict have also seen high trading volumes, some of it from insiders.
Rising oil prices amid an already fragile economy may lead many to believe things are following the trajectory set out by the Citrini Research group. Job losses last month were worse than anticipated, with unemployment rising 4.4%.
The S&P 500 has fallen around 8% since February, when the report was published.
“The S&P is near all-time highs. The negative feedback loops have not begun. We are certain some of these scenarios won’t materialize,” the authors wrote at the end of the thought experiment.
However, things are starting to go the way of the doomsday predictions. There is also a belief that AI is rapidly developing.
Kalshi’s market on OpenAI to achieve Artificial General Intelligence by 2028 is now a 34% chance. The realization could further drive the “human intelligence displacement spiral” predicted by Citrini.
Others, however, may be merely witnessing the rise and jumping on the bandwagon. One Kalshi user commented, “Just find the right time to cash out.”
