The Federal Reserve laid off employees for the first time in more than ten years, and the spokesman also blamed cloud services.

In the past year or so, every report on the news of layoffs confirmed by listed companies in the United States has inevitably mentioned the impact of "the Federal Reserve's violent interest rate hikes to suppress economic demand." Today, the protagonist of layoffs has become the Federal Reserve.

According to the latest news on Friday, the Federal Reserve System is expected to lay off nearly 300 people this fiscal year. Although the proportion is only about 1% of the total number of employees, this is the first time that the Federal Reserve has experienced a decrease in annual employment since 2010.

The Federal Reserve disclosed in last year's annual report that the actual number of employees employed by the end of fiscal year 2022 was 23,970, while the budget for 2023 was 23,974. It is worth mentioning that in fiscal year 2022, the Federal Reserve will have about 500 budgeted positions vacant, so layoffs have actually been "predicted" at the budget level, and the actual number of layoffs is slightly lower than expected. reduction status.

(Source: Federal Reserve Annual Report) A spokesman for the Federal Reserve said on Friday that the layoffs are mainly concentrated in 12 local Federal Reserves, and the most affected are information technology jobs. Among them, some engineers are unemployed because the popularity of cloud service software has made the Federal Reserve no longer need these positions. Also because the Fed is integrating a series of payment systems, some jobs will be eliminated in the process. The spokesman also said that in addition to layoffs, there are also factors such as staff retirement.

Of course, how many people the Fed will lay off this fiscal year will not be revealed until next year’s annual report is released. After the subprime mortgage crisis, the U.S. Congress gave the Federal Reserve more responsibilities, so starting from 2010 (19,700 people), the Federal Reserve has been in the stage of expanding its manpower.

Not directly related to "huge losses in bond positions"

According to data released last week, the total loss on the Fed's books has exceeded $100 billion, which reflects the difference between the interest paid by the Fed to banks on reserves and the interest generated by the $7.5 trillion in bonds and MBS securities held by the Fed. According to different estimates, the Fed's losses may expand to US$150 billion-200 billion by 2025. This loss figure is also directly related to when and how much the Federal Reserve cuts interest rates.

According to the financial report, the Federal Reserve system’s 24,000 people cost approximately US$6.3 billion in operating costs a year. However, the Fed will not be forced to lay off employees due to losses in asset positions. Based on the Treasury Department's earnings carry-forward mechanism, the Fed now only needs to issue an IOU and promise to wait until profits are achieved in the future before paying it back.

Similar to the Federal Reserve's statement of "laying off software engineers due to the use of cloud services," the Federal Reserve system also experienced a continuous decline in the number of positions from 24,000 to 19,700 between 2003 and 2010. The reason for the attrition at that time was paper checks. The days are over, and the Fed no longer has to hire armies of people to clean and process documents.