Citrini Founder’s AI Warning: Wall Street Shocked by Selloff

Lisa Ernst · 25.02.2026 · Artificial Intelligence · 9 min

The Global Intelligence Crisis and the Economy of Tomorrow

I have spent years tracking market shifts and technological disruptions, but few analyses have struck me with the same force as the recent "2028 Global Intelligence Crisis" report. It is a thought experiment posing as future financial history, painting a stark picture of AI’s potential to reshape—and possibly dismantle—the current economic order. While not a prediction, its scenario forces a critical examination of assumptions that underpin our global financial systems.

Before we dive into the details, here is a quick summary of the report’s key points:

• AI Agents: Autonomous software systems that boost productivity but displace human labor.
• Economic Crisis: A scenario where GDP grows, but demand collapses due to mass unemployment (US unemployment at 10.2% by June 2028).
• Market Impact: The report triggered billions in US stock market losses, particularly in software and automation-susceptible sectors.
• Mortgage Market Threat: White-collar job losses undermine the $13 trillion US mortgage market, leading to rising delinquencies in tech hubs.
• Government Revenue Decline: Federal tax revenues fall as human labor’s share of GDP decreases dramatically.
• Policy Proposals: Consideration of a "Transition Economy Act" or "Shared AI Prosperity Act" to support displaced workers.
• Debate: Critics argue the economy is adaptable, while proponents emphasize the need for proactive measures before negative feedback loops begin.

Source: This striking illustration offers a visual metaphor for the disruption and potential unknown future that AI technology could bring to global economies and market structures.

The Rise of AI Agents and the "Intelligence Displacement Spiral"

Citrini Research published "The 2028 Global Intelligence Crisis" on February 22, 2026. This report, framed as a "macro-memo from CitriniResearch from June 2028," describes a heightened future scenario rather than a definitive forecast. Its central premise pivots on the widespread adoption of AI agents, defined as autonomous, software-based systems capable of independently planning tasks, making decisions, and executing digital processes without human intervention, as detailed in "The Global Intelligence Crisis". These agents operate continuously without requiring benefits or social security contributions and scale limitlessly.

The report details how these AI agents dramatically increase productivity and corporate profits, yet simultaneously trigger a collapse in demand. It envisions a United States unemployment rate reaching 10.2 percent by June 2028. This phenomenon, dubbed a "human intelligence displacement spiral," sees the gross domestic product (GDP) continue to grow while demand plummets due to job losses. White-collar workers, whose earning power forms the foundation of the approximately $13 trillion US mortgage market, face structural degradation of their income and spending capacity.

AI-driven direct-to-consumer models could disrupt traditional intermediaries, reduce fees, and largely ignore advertising, as AI agents autonomously compare prices and negotiate directly with suppliers, as explained in "The Global Intelligence Crisis". This efficiency surge, while beneficial for businesses, leads to significant job displacement, weakening demand and exerting pressure on valuations and business models across various sectors.

Market Repercussions and Economic Rotations

The Citrini report instigated billions in losses across US stock markets. The Goldman Sachs "Software at Risk" index, for instance, dropped six percent in a single day, marking a 33 percent decline year-to-date. Software providers, payment services, delivery services, and travel companies experienced particularly severe pressure. The report garnered over 16 million views on X (formerly Twitter), highlighting how social media now plays a dominant role in market dynamics. A single blog post, in this case, wiped out tens of billions in market value across industries. The US software index plummeted more than four percent on a Monday, losing nearly a quarter of its value since the start of the year as investors distanced themselves from technology and automation-susceptible companies.

Source: alamy.com

A modern financial skyscraper, like the Goldman Sachs building, symbolizes the traditional institutions deeply rooted in market dynamics now facing pressure from evolving AI narratives.

Despite global stock markets remaining near record highs, a significant rotation is underway. Capital is shifting away from AI-heavy enterprises towards defensive stocks or profitable segments of the supply chain. Christopher Forbes of CMC Markets identifies chip manufacturers, data centers, and the energy sector as beneficiaries of AI development.

The Hypothecary Crisis and Shifting Economic Foundations

The "intelligence displacement spiral" has two major financial accelerators for the real economic decline: job displacement and mortgage issues. The US mortgage market, valued at around $13 trillion, operates on the assumption that borrowers maintain their current income levels for the loan’s duration. The white-collar employment crisis directly threatens this assumption with a sustained shift in income expectations. Early signs of stress emerged in 2027, with increased withdrawals from home equity lines of credit (HELOCs) and 401(k) accounts, alongside rising credit card debt, even as mortgage payments remained current initially.

Debt-to-income ratios for these households doubled as job losses mounted, hiring froze, and bonuses were slashed. Mortgage delinquencies began to rise in tech- and finance-heavy areas like San Francisco, Seattle, Manhattan, and Austin, while the national average remained within historical norms. The Zillow Home Value Index illustrates this, showing an 11% year-over-year drop in San Francisco by June 2028, 9% in Seattle, and 8% in Austin. Fannie Mae also reported increased early-stage delinquencies in zip codes with over 40% tech or finance employment. While concerns are mounting, the report cautions that a full-blown mortgage crisis has not yet materialized, with delinquencies still well below 2008 levels.

Unlike the 2008 crisis, which involved speculative excesses and subprime lending, the 2028 scenario describes loans that were sound at inception but became problematic as the economic landscape fundamentally changed. The problem is not one of initial credit quality, but of structural income erosion.

Source: unknown

The Zillow Home Value Index shows significant year-over-year drops in housing prices in tech-heavy cities like San Francisco, reflecting the early signs of stress in the mortgage market.

Socio-Economic Impact and Policy Responses

The report highlights that the federal government’s revenue base, largely reliant on taxing human labor, will face significant challenges. Federal revenues in Q1 2028 were 12% below CBO baseline projections, with payroll tax revenues declining due to fewer people employed at previous compensation levels and income tax revenues falling as earned incomes become structurally lower. This occurs even as productivity rises, with profits flowing into capital and computing power rather than labor. The share of labor in GDP, which decreased from 64% in 1974 to 56% in 2024, plummeted to 46% within four years of AI’s exponential improvement.

In response, the government is considering bipartisan proposals like a "Transition Economy Act" for direct transfers to displaced workers, funded by deficit spending and a proposed tax on AI inference computing power. An alternative, the "Shared AI Prosperity Act," would create a public claim on the returns from intelligence infrastructure itself, akin to a sovereign wealth fund or a royalty on AI-generated output, financing household transfers. Private lobbying efforts have, however, flooded media channels with warnings about a "slippery slope" associated with such measures.

Critiques and Alternative Perspectives

Critics argue that the Citrini report underestimates the economy’s adaptability, urging that the report be taken seriously but not literally. Ed Yardeni of Yardeni Research, for instance, believes AI will enhance worker productivity rather than displace it.

However, the report’s authors, including Alap Shah of Lotus, suggest the scenario represents a "macro-memo from CitriniResearch from June 2028," read in February 2026—meaning the negative feedback loops have not yet begun. They advise investors to assess how much of their portfolios rely on assumptions unlikely to survive the coming decade.

The report also touches on contrasting views regarding the immediate capabilities of AI. Some commentators suggest that current AI software engineering capabilities do not match the hype, and that the operational costs of AI-created products are yet to be fully understood relative to pre-AI development. Others voice concerns that the "San Francisco Consensus"—the idea that humans will be obsolete by 2030—is unlikely due to "jagged edges" in even superintelligent systems, implying that complex human judgment and interaction will remain crucial.

The economic landscape could also diversify as scaling becomes less essential for service provision based on inference costs. This could usher in a golden age for small and medium-sized enterprises (SMEs), potentially leading to job restructuring rather than mass unemployment, and a new selection of talent.

Conclusion

The "2028 Global Intelligence Crisis" report paints a sobering, albeit speculative, picture of an AI-driven future where the core assumptions of our current economic system are challenged. It describes a world where the most productive good creates fewer, not more, jobs, as elaborated in "The Global Intelligence Crisis". Human intelligence, historically the scarce economic input, is now replaceable by rapidly improving machine intelligence across diverse tasks. This forces a painful and disorderly reassessment of a financial system optimized for a different era.

❝ the canary is still alive ❞

Citrini Research

Report Author

The report concludes that "the canary is still alive," indicating that society still has time to act proactively. The question remains whether collective human ingenuity can harness this transformative technology to solve the problems it creates, rather than simply yielding to them.