AI's 'Ghost GDP' Could Trigger a White-Collar Recession by 2028

Feb 26, 2026, 2:31 AM

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James Van Geelen, a leading finance writer on Substack and founder of Citrini Research, is sounding the alarm about a potential economic crisis tied to rapid artificial intelligence (AI) adoption. His recent analysis presents a scenario dubbed "ghost GDP," which could manifest by 2028 if current trends continue unabated.

The term "ghost GDP" refers to economic output generated by AI that does not circulate through the traditional economy. This phenomenon arises as companies increasingly utilize AI to enhance profit margins, leading to mass layoffs that ultimately reduce consumer spending. Van Geelen's thesis suggests that the displacement of human intelligence—a key component of economic engagement—will create a negative feedback loop without any natural brakes.

The Rise of Ghost GDP

Van Geelen, whose investment portfolio reportedly surged over 200% since May 2023, uses his background in biology and psychology to offer "second-order thinking" about economic impacts. He warns that as AI systems optimize consumer decisions, traditional businesses reliant on human intermediation face existential threats. This includes sectors such as travel booking, insurance, and financial services, which Van Geelen predicts will be disrupted as machines replace human labor in roles that involve negotiating complexity.

In a hypothetical 2028 scenario outlined in Citrini's memo, the US unemployment rate could reach 10.2%, while the S&P 500 might experience a staggering 38% drop from its peak. Such dramatic shifts in the economic landscape would leave white-collar workers—currently making up about 50% of US employment and driving 75% of discretionary spending—vulnerable to downward wage pressures and reduced job security.

The Mechanisms of Displacement

The AI-driven landscape presents a paradox where increased productivity could lead to economic contraction. Van Geelen notes that, while nominal GDP may appear healthy, actual consumer engagement deteriorates as machines fail to participate in the economy's consumer base. "Machines spend zero dollars on discretionary goods," he states, highlighting a fundamental flaw in the ghost GDP model.

This displacement of human intelligence, which has historically been a scarce resource, poses significant risks to economic stability. As companies increasingly invest in AI technologies to maintain competitive margins, the cycle of layoffs and cost-cutting measures could accelerate, further hollowing out consumer demand.

Potential for Human Adaptability

While Van Geelen's scenario paints a grim picture, some analysts argue that human adaptability could mitigate these risks. Historical productivity gains often lead to the reallocation of value rather than outright destruction. The emergence of new industries and consumer behaviors may counterbalance the loss of jobs in traditional sectors, suggesting that the economy could evolve rather than collapse.

Moreover, some experts contend that AI's role should not be viewed solely through the lens of job displacement. Instead, it can enhance operational efficiency, allowing workers to focus on higher-value tasks. This perspective emphasizes the need for businesses to adapt rather than merely reduce headcount.

Conclusion

As the economy grapples with the implications of AI, the concept of ghost GDP serves as a cautionary tale about the potential for widespread disruption. Van Geelen's warnings resonate with the broader discourse on how societies can harness AI while safeguarding the human elements that drive economic engagement. The challenge lies in finding a balance that allows for innovation without sacrificing the foundations of consumer demand and economic stability.

The future remains uncertain, but the dialogue surrounding AI's impact on the economy is crucial as we prepare for the realities of a rapidly changing landscape. The outcome will depend significantly on our ability to adapt and innovate in response to these technological advancements.

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