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Federal Reserve Losses Dashboard & Data

This dashboard provides the current Federal Reserve losses in graphical form, analysis, and the raw data. Furthermore, links are provided to additional resources so you can gain a clear understanding of the implications and potential risks.

Charts showing the Federal Reserve's accrued losses from Sept 21, 2022 through August 16, 2023. The most recent week ending August 16, 2023, the Fed lost $2.442 billion. The average weekly loss for the period rose to $1.805 billion, a new record.  Cumulative losses exceeded $90 billion this week ($90.255 billion).  The week ending August 16, 2023, marks the 48th consecutive week since the Fed’s earning remittances due to the U.S. Treasury account sank negative.  They have incurred additional losses every week since then.
Data: FRED database; Graphics Econ-Intel

As of August 16th, 2023, the total accrued loss that the Fed must earn back before remitting additional funds to the treasury exceeded $90 billion dollars ($90.255 billion).  The Fed’s loss over the most recent week was $2.442 billion. Since the beginning of December 2022, only one weekly loss has been less than a billion dollars. This was the week ending December 27th 2022 at a loss of $780 million. August 16th, 2023 marked the 48th consecutive week of losses for the Fed, since the Fed’s earnings remittances due to the U.S. treasury account dropped negative.

The Fed’s losses have become an even more critical component of the U.S.’s financial condition with the failures of Silicon Valley Bank and Signature Bank. The Fed has stated that they will backstop the bank’s losses with a credit facility that will accept banks’ discounted securities at full face value. This means that the Fed will be making loans that are only partially collateralized. The recent downgrade of the banking industry is a major concern. Yet the larger concern in the long-run may be that the Federal Reserve is now making partially collateralized loans, which exposes it to additional losses, should one of the banks be unable to repay their partially collateralized loan.

Fed Losses: the Fed is Losing Money, provides an in depth look at the Fed’s losses. Including examining and explaining their balance sheet. If you want to understand the significance of the Fed’s losses and what is at risk, we recommend How Much Can the Fed Tighten?  The Fed’s losses and other forces are combining to erode the Fed’s ability to fight inflation.

Federal Reserve Paths Back to Profitability

There are three primary possibilities for the Fed to return to profitability. First, the Fed could return to profitability by lowering interest rates. This solution would reduce the rates that the Fed is paying on deposits and reverse repo agreements. This could return the Fed to profitability. However, it would also result in a return to an easy money policy which could rekindle inflationary pressures. Second, the Federal Reserve could simply wait. Given a long enough time period, the Fed’s current holdings will mature. As they do, the proceeds can be invested at higher interest rates. The drawback with this option is that it will take an extended period of time, as only a small portion of the Fed’s securities mature each month. Finally, the Fed could return to profitability, as banks and money market funds liquidate their deposits and reverse repo agreements. A decline in banking deposits could also indicate a less liquid banking sector. Econ-Intel will be monitoring to see if this is the path that unfolds. Additionally, we will keep an eye on the banking industry’s liquidity metrics.

Sourced Federal Reserve losses data and calculations based upon the data below for your exploration:

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