Block's layoffs illustrate the market conundrum at the heart of the viral Citrini report
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- Block stock surged after the company said it would axe 40% of employees.
- It illustrates a tension between markets and the economy outlined in the viral Citrini report.
- The firm outlined a scenario in which AI job losses spark a white-collar recession in 2028.
Part of Citrini Research's viral view of an economy reshaped by AI might be playing out in real time on Friday.
Block investors are celebrating after the financial services company said it would axe nearly half of its workforce on Thursday. It's good news at the moment, and it points to fatter margins for the tech company. However, it shows a key disconnect between markets and the economy that the Citrini report's authors identified: While investors may like the efficiency gains from a slimmer workforce, if the ranks of America's jobless continue to grow, the economy will suffer.
Alap Shah, the investor who helped author Citrini's viral report, used the moment to tout the paper's foresight.
"It's a textbook example of the changes we are warning about in The Global Intelligence Crisis," Shah wrote in a post on X about Block's cuts Thursday evening. "It's a cold look at the nature of AI's progress: companies can accelerate output while drastically lowering coordination costs."
Shares of Block popped 18% on Friday as investors took in the company's earnings and the news that the firm would cut more than 4,000 jobs, reducing its workforce by around 40%. AI efficiency was explicitly cited as a factor behind the cuts, according to comments from CEO Jack Dorsey on the company's earnings call and in posts on X.
Reduced headcount at companies is often a reason for the market to celebrate, but the sharp reaction from investors shows the market's overarching conundrum.
Anxieties over AI-fueled job losses swelled this week after the viral report that outlined one possible scenario where artificial intelligence could spark a white-collar recession in several years' time. The report, which was written as a look back from 2028, speculated that unemployment could rise to over 10%, with the first wave of "layoffs due to human obsolescence" beginning in early 2026.
"They did exactly what layoffs are supposed to. Margins expanded, earnings beat, stocks rallied," the report said of AI-fueled job cuts, speculating that those within the software space in particular could see their "wealth explode" despite "cracks" appearing in other areas of the economy.
The report helped stoke a major sell-off in stocks at the start of the week, but some market pros have been skeptical of the unemployment scenario outlined by Citrini. In a rebuttal, analysts at Citadel Securities suggested that job gains stemming from AI could offset losses.
Contributer : Business Insider https://ift.tt/oaMHbgx
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Saturday, February 28, 2026
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