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Bullish +65

Citrini's AI Jobs Doom Scenario 'Extremely Unrealistic,' Economist Says - IBM (NYSE:IBM) - Benzinga

📉 Economist Julius Probst labels a viral Citrini Research scenario predicting 10.2% unemployment by 2028 as 'extremely unrealistic' due to inevitable fiscal stimulus responses.

🤖 Job postings mentioning AI skills have increased roughly threefold over the past couple of years, signaling strong demand for specialized talent.

🏗️ Technology companies are on track to spend approximately $700 billion on U.S. data center construction this year, boosting labor in Texas and Arizona.

💼 Routine white-collar roles face displacement risks, while blue-collar and manual jobs remain insulated or benefit from broader economic growth.

📈 May employment payrolls rose 172,000, more than double the consensus estimate, with unemployment steady at 4.3% despite high oil prices.

🏛️ Federal Reserve Chair Kevin Warsh faces pressure as inflation remains above the 2% target for five straight years, though markets expect no immediate rate hike.

📉 IBM stock fell roughly 13% in a single session after the Citrini Research memo circulated, illustrating how narrative can drive market volatility.

🔥 Construction wages are rising strongly as demand for skilled labor outpaces supply in remote areas like Texas and Arizona.

Bullish Signals
  • Job postings that mention AI skills have increased roughly threefold over the past couple of years, indicating robust growth in high-tech sectors.
  • The U.S. economy showed resilience with May payrolls rising 172,000, more than double the consensus estimate, despite an oil shock.
  • Technology companies are investing heavily in infrastructure, with data center spending projected to reach roughly $700 billion this year.
  • Blue-collar and manual jobs appear insulated from AI displacement and may even benefit as the wider economy grows.
  • Economists argue that productivity booms historically drive growth, suggesting the current market reaction is based more on narrative than hard data.
Risk Factors
  • Routine white-collar roles in customer service, sales, and entry-level finance face genuine displacement risks from AI adoption.
  • Inflation rose 4.2% in May, the hottest reading since 2023, creating pressure on the Federal Reserve to address its 2% target.
  • The Citrini Research memo triggered a sell-off with IBM falling roughly 13% in a single session, highlighting market sensitivity to AI narratives.
Full Analysis
Economist Julius Probst of Recruitonomics has dismissed a viral 'AI Jobs Doom' scenario predicting 10.2% U.S. unemployment and a 38% S&P 500 crash by June 2028 as extremely unrealistic. Probst argues that such a severe shock would trigger immediate fiscal stimulus and rate cuts, creating an unstable equilibrium rather than a sustained collapse. This view aligns with Citadel Securities, which previously argued the scenario misread macro fundamentals. The article highlights a divergence between AI fears and current labor market data, noting that job postings for workers with AI skills have tripled over the past two years. While routine white-collar roles face displacement, blue-collar and manual jobs remain insulated or benefit from economic growth. Probst compares the current technological shift to the internet boom of the 1990s, suggesting AI will likely create significant new employment opportunities. Construction demand for data centers is surging, with companies expected to spend roughly $700 billion in the U.S. this year alone. This has driven up wages for skilled manual labor and construction roles, narrowing the historical wage gap between office and site work. Despite high oil prices averaging $107 a barrel due to the Strait of Hormuz closure, May employment payrolls rose 172,000, more than double consensus estimates, indicating strong economic resilience. The piece concludes with a critique of Federal Reserve policy under new Chair Kevin Warsh. Although inflation hit 4.2% in May, markets expect no rate changes. Probst argues the Fed should be more aggressive to meet its 2% target given five years of elevated inflation, suggesting internal committee dynamics may eventually force action despite current market passivity.