A widely discussed forecast warning that artificial intelligence could trigger mass unemployment and a market crash is drawing fresh criticism from economists who argue the scenario dramatically overstates the risks facing the labor market.

Julius Probst, senior economist and director of research at Recruitonomics, the research arm of hiring-data firm Appcast, said Monday that predictions of AI-driven unemployment reaching double digits are “extremely unrealistic,” pointing to current labor-market data that continues to show job growth rather than collapse.

The forecast Probst is challenging originated with Citrini Research, an independent research firm founded by James van Geelen. In February, the firm published a widely circulated report framed as a fictional memo from June 2028 describing a future in which AI-powered software agents had replaced large numbers of skilled office workers.

In that scenario, corporate profits surge as automation spreads across industries, but unemployment climbs to 10.2%, the S&P 500 plunges 38%, and rising mortgage defaults among displaced white-collar workers create broader economic instability.

Although Citrini explicitly described the report as a scenario rather than a formal prediction, the analysis quickly gained attention across Wall Street and technology circles. Investors began reassessing which industries could be most vulnerable to AI-driven disruption, contributing to increased volatility in several technology-related stocks.

The report also sparked immediate pushback.

Market participants, including analysts at Citadel Securities, argued that the scenario relied on assumptions that failed to account for how businesses, consumers and policymakers typically respond during periods of economic stress.

Probst shares that skepticism.

His central argument is that unemployment does not simply rise to 10% and remain there without triggering broader responses throughout the economy. A labor-market shock of that magnitude would likely cause consumer spending to weaken, financial markets to decline and economic growth to slow sharply.

Under such circumstances, policymakers would almost certainly intervene.

Historically, major economic downturns have prompted aggressive responses from both the Federal Reserve and the federal government, including interest-rate cuts, emergency lending programs and fiscal stimulus measures designed to stabilize employment and economic activity.

“The scenario assumes policymakers essentially stand by while the economy deteriorates,” Probst argued. “That is not how modern economic crises have been managed.”

Current labor-market conditions also present a challenge to the most pessimistic forecasts.

The latest employment data showed U.S. employers adding 172,000 jobs in May, while the unemployment rate remained at 4.3%. The figures exceeded many economists’ expectations and suggest that hiring remains resilient despite economic uncertainty and elevated interest rates.

Rather than seeing broad-based labor-market destruction, Probst argues that the economy is undergoing a shift in which different skills are becoming more valuable.

He points to the massive wave of investment flowing into AI infrastructure. Technology companies are expected to spend hundreds of billions of dollars building data centers, power facilities and supporting infrastructure across the United States.

Much of that construction is taking place in states such as Texas and Arizona, where demand for skilled trades workers continues to rise.

Electricians, welders, construction crews and other infrastructure-related workers are benefiting from labor shortages that are driving wages higher. At the same time, some traditional white-collar occupations are seeing slower wage growth and weaker hiring demand.

Probst describes the trend as a partial reversal of long-standing labor-market dynamics.

For decades, office-based knowledge work generally commanded higher compensation than many skilled trades. The rapid expansion of AI infrastructure is beginning to narrow that gap in some parts of the economy.

That distinction is important because it highlights a difference between labor-market disruption and labor-market destruction.

Artificial intelligence is clearly changing how companies hire and organize work. Some routine office functions are being automated, and employers in certain sectors have become more cautious about adding headcount. Yet those same technological investments are creating demand elsewhere in the economy.

The result, according to Probst, is not a disappearing labor market but a changing one.

Even many AI skeptics acknowledge that legitimate concerns remain. The speed at which AI systems improve could reshape hiring patterns, alter career paths and force workers to adapt to new demands more quickly than in previous technological transitions.

Those uncertainties help explain why reports such as Citrini’s attract attention.

The fear is not simply that jobs disappear, but that automation advances faster than businesses and workers can adjust. Whether the economy creates enough new opportunities to offset displaced positions remains one of the central questions surrounding artificial intelligence.

For now, however, Probst argues that current evidence does not support predictions of imminent labor-market collapse.

The U.S. economy continues to create jobs, businesses continue to invest, and unemployment remains well below recessionary levels. Artificial intelligence may be changing the labor market, but according to Probst, that is a very different outcome from the economic catastrophe envisioned in the viral 2028 scenario.

JBizNews Desk
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