In February, a viral thought experiment from Citrini Research imagined a June 2028 in which artificial intelligence had pushed U.S. unemployment to 10.2% and dragged the S&P 500 down 38%.
Four months later, the labor market is doing the opposite of falling apart.
“That scenario of 10% unemployment, especially two years from now, strikes me as extremely unrealistic,” Julius Probst, a senior economist and director of research at Recruitonomics, part of Appcast Inc. said in an exclusive interview with Benzinga.
The Citrini Research memo, written as fiction set two years out, spread across Wall Street and helped trigger a sell-off when it landed, with International Business Machines Corp. (NYSE:IBM) falling roughly 13% in a single session.
Citadel Securities later published a rebuttal arguing the scenario misread the macro fundamentals.
Probst lands in the same camp, for one main reason: a 10% unemployment is an unstable equilibrium that feeds on itself.
“If we suddenly have 10% unemployment, then consumption will drop, stock markets will drop, the economy will crash,” he said.
A shock that severe would simply be met with fiscal stimulus and rate cuts, he added.
Three Workers, Three Different Futures
Probst does not dismiss AI’s labor-market impact. He splits the workforce into three groups.
Workers with AI skills are winning, he said, with job postings that mention those skills up roughly threefold over the past couple of years.
Routine white-collar roles — customer service, sales, entry-level finance — face genuine displacement. Blue-collar and manual jobs that require a physical presence are insulated, and may even benefit as the wider economy grows.
“There’s a good chance AI will create a lot of new jobs,”
Probst said, comparing the moment to the internet boom of the 1990s. He described himself as “semi-optimistic.”
The clearest evidence is being poured in concrete.
Technology companies are on track to spend roughly $700 billion on U.S. data centers this year, Probst said, and the construction demand is concentrated in remote parts of Texas and Arizona where skilled labor is scarce.
That scarcity is pushing pay up.
Wages for routine white-collar work have stagnated in inflation-adjusted terms, he said, while compensation for construction and skilled manual roles is rising strongly — narrowing a gap that has favored desks over job sites for decades.
Why Hasn’t The Oil Shock Bitten?
The May employment report showed payrolls rising 172,000, more than double the consensus estimate, with unemployment steady at 4.3% — a sharp turn from the near-zero job growth that closed 2025.
That resilience is what surprises Probst, who had written about how an oil shock would typically cost jobs. Brent crude averaged about $107 a barrel in May with the Strait of Hormuz still closed.
“It’s a little bit of a puzzle. I didn’t quite expect it,” he said. His explanation: loose fiscal policy, record stock prices, a wealth effect from high asset values and the AI investment wave are together more than offsetting the energy hit.
A Message For Warsh And The Fed
The transmission runs straight into this week’s Federal Open Market Committee meeting, Kevin Warsh‘s first as chair, on June 16-17. The Consumer Price Index rose 4.2% in May, the hottest reading since 2023, yet markets see almost no chance of a move.
Probst thinks that is too passive. Inflation has run above the Fed’s 2% target for five straight years.
“If you want to be serious about this inflation target, they should probably hike,” he said.
He was more cautious on Warsh himself.
“He probably doesn’t want to hike interest rates, but there will be other people on the committee who are more in favor of being serious about inflation,” Probst said.
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