Adjusting the forecast for larger US federal layoffs

What you will learn:

• We will revise the forecast for federal employment significantly lower this year, and in subsequent years, because of the announced layoffs and anecdotes about the number of federal employees that have accepted the buyout offer. While this is more workers than we anticipated leaving, the impact on the unemployment rate and inflation is modest, at best.
• The March baseline forecast will incorporate a net decline of 200,000 federal workers over the course of 2025 and additional declines in subsequent years. There is considerable uncertainty about this estimate due to the lack of clarity in the number of layoffs that are already underway and the possibility that that it gets tied up in the courts.
• In addition to layoffs, there are reports that 70,000-80,000 workers accepted the deferred resignation offer from the Trump administration. Most of the impact from the estimated number of those who accepted the deferred resignation offer will not be visible in the employment data until this fall, as they will remain on the payroll until September 30.

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