As artificial intelligence (AI) continues to reshape the economy, so too does anxiety over its potentially negative consequences.
Many of these potential consequences were articulated in the “Citrini scenario,” a bear-case AI narrative published by Citrini Research late last month.
The “Citrini scenario” paints a picture of rampant AI investing leading to a doom loop, and eventually, a stock market crash in 2027. Specifically, it flags the potential for a decline in consumer-facing corporations like Uber, American Express, Mastercard and DoorDash, driven by high unemployment caused by AI.
While many AI bulls were quick to dismiss the paper’s concerns, Kalshi’s market on the topic suggests the threat is more plausible than some may think.
While traders initially priced the chances of a real-life Citrini scenario occurring before July of 2028 at around one in ten, they now price its likelihood at over 30%, or nearly one in three. For reference, more than $14M has been traded in this market thus far.
This is an opinion and not financial advice. The author cannot trade on Kalshi.
The “Citrini scenario”
The “Citrini scenario” is characterized by five potential economic crises. It begins with AI bots/agents consuming intermediary work. Subsequently, mass white-collar unemployment follows, giving way to a private credit and mortgage crisis.
Meanwhile, layoffs lessen consumer spending (and demand), forcing corporations to invest more in AI. In turn, that creates a cyclical pattern. By the end, Silicon Valley and its many titans find their campuses occupied with protesters for months.
For Kalshi’s market on the “Citrini scenario” to resolve to “yes,” three of those outcomes must occur. Specifically:
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.
AGI
While chances of the “Citrini scenario” actually taking place are climbing, it remains more likely that it will remain a hypothetical, at least for now.
However, traders now think another theoretical AI milestone is far more plausible: Artificial General Intelligence.
Currently, traders price OpenAI’s chances of achieving AGI prior to 2030 at 53¢, with its agents outperforming humans in essentially all cognitive areas.
The takeaway
Kalshi markets now forecast:
Chances of the “Citrini scenario” happening by July 2028: 30%
OpenAI achieves AGI before 2030: 53%
Follow Gabriel Santiago on Instagram: @ByGabrielSantiago
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