An artificial intelligence research paper has triggered global market concerns by theorising that rapid AI adoption could erase white-collar jobs, reduce consumer spending power, and ultimately lead to a widespread recession. The report, co-authored by Citrini and Littlebird.ai CEO Alap Shah, presents a future scenario set in 2028 where the AI boom backfires on the broader economy.
Speaking on the "TBPN" podcast on Monday, Alap Shah elaborated on the paper's central thesis. He argued that while blue-collar sectors currently appear strong, they would not be insulated from a collapse in white-collar employment, stating there is ultimately only "one labour market."
Domino Effect on the Entire Labour Force
Shah explained the potential cascade effect. "Let's say in our scenario, we talk about 5% of folks might get fired in a couple of years," said Shah. "Those 5%, if there aren't white collar jobs for them to relocate into, then they're going to have to move into the gig economy and the blue collar labour force." This migration, he warned, would increase competition and depress wages across all employment sectors.
The report, published on Sunday, is written from a futuristic viewpoint. It describes a "negative domino scenario" where mass AI-driven layoffs occur too quickly, dealing a severe blow to metropolitan housing and mortgage markets. This, in turn, could trigger a global stock sell-off and a recession affecting all industries.
Systemic Risk and a "Daisy Chain" of Bets
The paper posits that the modern economy has become overly reliant on continuous white-collar productivity gains. "The system turned out to be one long daisy chain of correlated bets on white-collar productivity growth," the authors write. They theorise that a market crash in November 2027 would accelerate these "negative feedback loops," causing AI innovation itself to stall due to a subsequent lack of investment funding.
Shah also addressed the apparent resilience of sectors like health and education, suggesting their growth is largely fuelled by government spending. He warned this support could vanish if a recession slashes tax revenues from payrolls. "Those sectors continue to grow because government spending grows," Shah noted. "But again, it gets very circular if government spending is coming primarily from taxes and primarily payroll taxes."
The research highlights a growing debate about the economic and social ramifications of accelerated AI integration, moving beyond discussions of job displacement in specific sectors to warn of potential systemic risk to the global economy.