Artificial intelligence is expected to become an increasingly important macroeconomic force over time, according to Citi strategists. However, the timing of any significant disruption to the labor market remains highly uncertain.
In a note led by strategist Dirk Willer, Citi stated that AI could eventually contribute to higher unemployment and disinflationary pressures. Yet, the bank emphasized that the timeline for such effects is unclear. Because of this uncertainty, Citi believes monetary policy risks are tilted toward a more dovish stance, with greater probability of lower Federal Reserve interest rates rather than higher ones.
The debate around AI has shifted in recent months. Instead of questioning whether AI investment is excessive, markets are now focused on how quickly artificial intelligence could disrupt white-collar employment. While rapid advances in generative AI have raised concerns, Citi noted that current labor market data show limited widespread impact so far. Broad indicators suggest the job market is still performing relatively well.
According to the strategists, weakness has mainly appeared in specific areas, such as early-career programmers and customer service roles. Beyond those segments, there is little concrete evidence of large-scale displacement at this stage.
Looking ahead, Citi highlighted several implementation challenges that could slow AI adoption. Regulatory constraints, corporate integration hurdles, and energy supply limitations may delay the pace of workforce disruption. While AI capabilities may expand rapidly, real-world deployment across businesses is likely to follow a more gradual path.
Energy infrastructure is seen as a major limiting factor. Citi argues that current energy supply levels would not support replacing a substantial portion of global white-collar jobs with AI systems. As long as this bottleneck remains, demand for human labor should persist.
Over time, improvements in efficiency and investment in energy capacity could reduce these constraints. However, Citi believes this transition will take time.
In the longer term, the bank outlines a scenario where strong productivity growth coexists with job losses and downward pressure on prices. This outcome may become more likely if income gains from AI remain concentrated among a small group of technology leaders. Under such conditions, central banks may need to maintain a dovish policy bias.
Citi also noted that exposure to AI disruption varies by region. Among developed economies, the United States and the United Kingdom appear particularly vulnerable due to their high share of white-collar service employment. In emerging markets, countries such as Israel, South Korea, and parts of central and eastern Europe may face greater risks from AI-driven labor shifts.
