Citi Research, in a note led by strategist Dirk Willer, warned that "a technological disruption combined with heavily concentrated winners means strong growth can coexist with unemployment and deflation"1. The timing of such a divergence, Willer's team acknowledged, remains "very unclear."
The warning landed between Citrini's deflationary spiral thesis and Citadel's empirical rebuttal. Willer's argument is that both sides describe different layers of the same economy.
The historical parallel is the "Engels' Pause" — the period between roughly 1790 and 1840 when British GDP expanded while real wages for most workers stagnated. Factory output and trade surged; the gains accrued to capital owners and a narrow class of skilled operatives. The broader workforce absorbed displacement for decades before wages caught up. Citi's framework maps a similar pattern onto the current moment: a handful of firms committing record AI infrastructure spending generate headline growth that masks contraction elsewhere.
The policy problem is specific. Fiscal tools for recession assume weak aggregate growth. Tools for inflation assume tight labour markets. An economy growing at the top and shedding jobs at the bottom fits neither template. Governments relying on GDP as their primary signal risk celebrating growth while the tax base beneath it erodes.
