“Pure nonsense” or “underestimated risk”? Business leaders comment on viral crash report

Claudia Sahm

Claudia Sahm, chief economist at New Century Advisors and creator of the Sahm Rule recession indicator, expressed reservations about the way the scenario was presented.

“One of the problems with the Citrini scenario (and the same is true at the moment) is the focus on destruction rather than creation,” Sahm wrote on Platform X on Monday. “Perhaps the latter takes longer, but it is also important for the new balance,” she added.

In a subsequent post, she stated that a labor market shock of the scale Citrini describes would likely trigger a strong economic policy response.

“The labor market crisis they describe would generate a strong fiscal and monetary response. They are downplaying it,” Sahm wrote. “The more likely scenario of gradual and limited job losses will be all the more difficult to get policymakers to pay attention and act on.”.

Michael Burry

Michael Burry, the investor famous for predicting the 2008 real estate crash and portrayed in the book and movie “The Big Short,” shared the report with his millions of followers.

“And you think I'm the pessimist” — wrote Burry on X, providing a direct link to Citrini's research.

Brendan Duke

Brendan Duke, senior director for federal fiscal policy at the Center on Budget and Policy Priorities and former senior policy adviser on the White House Economic Council of the Biden-Harris administration, said many critics may be misinterpreting the report's assumptions.

“Many people have trouble understanding the concept of a thought experiment.” — wrote on X.

However, Duke added that One of the underestimated risks in this scenario is the impact on financial markets if “the best upper-middle-class borrowers whom no one ever thought would default… were to default.” — referring to the report's suggestion that layoffs among white-collar workers could lead to problems with prime mortgage lending and the private credit market.

See also: Leader of a tech giant: The world has become more “national”. You can benefit from this

Jeff Dorman

Jeff Dorman, investment director at Arca, treated the reaction to the report as a lesson in investor psychology.

“The most important conclusion from the virality of this catastrophic Citrini material is that fear sells.” — wrote Dorman on X, referring to Monday's stock sale.

He said that markets and the media often reward dramatic predictions of a crash, even if they rarely materialize.

“There are thousands of successful macroeconomic newsletters you pay for, all of them telling you to buy gold, build a bunker and play on falling stocks,” he wrote, adding that famous recession forecasters often gain prominence despite repeated false alarms.

Deepak Shenoy

Deepak Shenoy, founder of Capitalmind, compared warnings of an AI-led recession to earlier warnings of resource shortages.

“This is a viral post that is scaring everyone right now,” Shenoy wrote on X.

He pointed to warnings around 2008 that global oil reserves were running out — fears that ultimately did not lead to the collapse of the energy industry.

“Disaster pornography is addictive” Shenoy wrote. “AI as the end-all be-all is the WWE of the world today – it's fun to watch, but it's mostly fiction.”

Michael Bloch

Michael Bloch, partner at the VC fund Quiet Capital, published a polemic titled “Global intelligence boom 2028”.

He said that even if AI develops rapidly, it does not have to end in a crash – it may even make the economy richer.

“What if our optimism about AI still turns out to be right… and what if this is actually a positive sign for the market?” — he wrote on Substack over the weekend.

Joseph Steinberg

Joseph Steinberg, an economics professor at the University of Toronto, didn't beat around the bush.

“Pure nonsense and a perfect example of why basic economic reasoning is more important than ever in the age of AI.” — wrote on X.