'Sahm's Rule' Creator Skeptical of Citrini Report: More Concerned About Gradual Job Replacement

Strong Policy Response Expected in Case of Rapid Job Losses
Gradual Decline May Lead to Hesitation in Government Intervention

Claudia Sam, the star economist who developed the recession indicator known as "Sahm's rule" and currently serves as Chief Economist at New Century Advisors, has analyzed that a gradual replacement of jobs by artificial intelligence (AI) poses a more serious risk. This is a rebuttal to Citrini Research's "2028 Global Intelligence Crisis" report, which raised concerns about the rapid displacement of jobs due to recent advancements in AI.

The report warns that AI-driven automation will lead to mass layoffs in office jobs, with companies reinvesting the labor cost savings and productivity gains back into AI. This, it argues, will create a vicious cycle of layoffs, reduced consumer spending, deteriorating corporate profits, and further layoffs. As a result, it forecasts that the U.S. unemployment rate will soar to 10.2% in 2028, and the S&P 500 index will fall 38% below its October 2026 peak, leading to an economic crisis fueled by AI.

Claudia Sam, Senior Economist at New Century Advisors. Claudia Sam

According to Business Insider on February 26 (local time), economist Sam predicted that, rather than a sharp and sudden replacement of jobs, a more moderate and gradual decline in employment is likely. She said, "If such apocalyptic scenarios as outlined in the Citrini report were to materialize, I believe there would be a strong policy response," adding that measures such as direct cash payments or a comprehensive overhaul of the tax system, similar to those implemented during the COVID-19 pandemic, could be utilized. She went on to say, "I am actually more concerned about a crisis that unfolds slowly and accumulates over time," noting that if job losses occur at a gradual pace, policymakers may be more hesitant to intervene.

According to the U.S. Department of Labor, while overall employment has declined in the past year, layoffs have been increasing over the past five years. The market is flooded with forecasts that AI could accelerate job losses. Even before the Citrini report, Goldman Sachs projected that AI could replace approximately 6 to 7% of all U.S. workers.

Economist Sam recognizes the potential for AI to significantly boost productivity and transform the U.S. economy but said she is increasingly considering the impact of AI on the labor market.

Regarding the U.S. economic outlook for this year, she does not expect a recession to occur; however, she warned that large-scale layoffs or a sudden market correction could quickly tip the economy into recession. She added that after observing this week's market volatility, she is considering raising her current estimate of the likelihood of a recession, which she currently places at 15%.

Sam commented, "What if AI works so well that it actually brings down the entire economy?" She continued, "Although this scenario remains far from my base case, I am acutely aware of the considerable uncertainty that remains."

This content was produced with the assistance of AI translation services.