The post office expected to make money this year. It did not come close. Let’s investigate why. 
Postmaster Blames Inflation
CNN reports the US Postal Service lost $6.5 billion last year. It predicted it would break even.
The US Postal Service lost $6.5 billion in its just-completed fiscal year, delivering a blow to the service’s hopes of a financial turnaround.
The Postal Service had projected it would break even in the fiscal year that ended September 30, on its way to annual profits this year and going forward. Its results are particularly disappointing because it received a bump in its revenue earlier this year when shippers shifted package volume away from UPS because of the threat of a strike there.
Postmaster General Louis DeJoy blamed the loss on inflation raising costs for its operations. It also sent printing prices surging, which significantly reduced the amount of junk mail marketers sent via the mail.
The Postal Service reported that revenue from shipping and packages, now the largest segment of its business by revenue, edged up 1% to $31.6 billion, even as the volume fell by 2%. First-Class mail also brought in 2% more revenue, climbing to $24.5 billion, despite a 6% drop in volume. The biggest hit was a $920 million, or 8%, decrease in revenue from marketing mail.
Hoot of the Day
The cost of ink and paper has risen so much that marketers are sending less junk mail.
Less junk mail is the first benefit to inflation that I have come across. But it created a $920 million hole in post office revenue.
Why the post office expected to make a profit is a mystery. The Postal Service reported net income of $56 billion in the previous fiscal year but that was primarily due to the non-cash gain of nearly $57 billion from 2022 legislation that changed the way it accounted for its retiree health care expenses.
Other than a one time accounting gimmick, the Post Office never came close to making money.
CPI Unchanged Thanks to Decline in Energy, but Rent Jumps 0.5 Percent
A 2.5 percent decline in energy smoothed the CPI. But for the 27th straight month, the cost of rent rose at least 0.4 percent.
For discussion, please see CPI Unchanged Thanks to Decline in Energy, but Rent Jumps 0.5 Percent
Talk of a tame CPI report this month is entirely an energy mirage and easy year-over-year comparisons. Food is a particular case in point.
Price Change vs Two Years Ago
- Food at Home: 14.8%
- Food Away from Home: 14.4%
- Meat, Fish, Eggs: 8.4%
- Dairy: 15.1%
- Cereals: 20.7%
- Fruits and Vegetables: 10.6%
For further discussion of food prices, please see The Average Increase in the Price of Food Every Month for 32 Months is 0.6 Percent
and their service is as bad as the DMV’s….. good grief. Usually 2 people at counter in my local PO – one for passports the other to handle the line out the door.
This year they changed the kiosk so you have to enter your name & address as well as the recipients for each package you send. Stupid is.
People don’t write letters any more (they communicate electronically these days). I would guess that First class mail is mostly bills payments these days and even those are going the way of ACH auto-pay. USPS has to compete with private carriers for parcels now (UPS, FedEx, DHS, etc.). USPS served a purpose before the digital age. Not so much these days. $.02
USPS is a unionized business, not going to get competitive in price and service unless forced to. Let UPS, FEDEX, DHL compete for business. Cost would probably go down and service improved. Maybe split service east -west – north south on contracts. Any thing is better than using USPS.
Private companies will try to higrade all the easy areas….make them compete EVERYWHERE…
Do you realize that the USPS has to pay into their retirement for people not born yet. 75 years to be exact. This started with Bush Boy and has just continued. . Yet your facts straight.
Why are the comments in a light gray color that is difficult to read?
People are so goddamn stupid it defies fucking belief. So, Benjamin Fucking Franklin thought it a service to the People to have a Federal Post- so it became so. This whole bs about OMG the USPS has to make money is such MISINFORMATION it’s ridiculous!
Does the local library “make money”. How about the goddamn US Forest Service, do those motherfuckers make money???
Wake up people! The USPS provides a unique and sorely needed service to all Amerikans. Trump put DeJoy into the Postmaster General spot to wreck the US Post Office & to mindfuck all the useful idiots into playing along. Wait till he puts the USPS outta business and see how much fucking UPS & FedEx will charge!
Look, we can’t go straight up ultra Libertarian Harry Browne here. What’s next: sell off all our National Parks because that’s what he wanted to do along with the likes of Doug “Uraguay” Casey. Bitches!
Government provides services to community that the private sector cannot provide or are commercially impractical to provide. For example, interstate highways. At one time, post office and libraries feel into this category. With advent of internet, email, Amazon, UPS & FedEx, do we even need government to provide these services? (Of course I realize the elimination will cut of funding if public sector pension funds – primary argument for survival).
@Mish
Is the language in @1776’s comment “Mish approved”?
If that commenter wants to disagree with some or all of us, great. It makes for a more interesting blog / comments.
But is all the fucking and goddam and bitches stuff needed?
Thanks for your comment. I need changes to address this setup and have asked for them.
Will take care of it.
Thanks again.
Did Franklin believe government services should lose billions of dollars to the detriment of the taxpayers?
AndyM has the correct answer. We have a corporatocracy. Government run for the big businesses.
In many parts of the world, mail is officially delivered to each address 2-3 times per week — not every day. And once per week isn’t unusual either.
The USPS could divide each town/city into five parts (Monday to Friday), spread across said town/city. Maybe use the last digit of the zip+4 to determine? Each address would get mail on “its day”, but only once per week.
We still get our junk mail, our bills, our tax assessments — the politicians and junk mailers are happy. We still get our family letters and post cards for those who still send them. Each delivery is 5x bigger, but the mailman only has to deliver to 1/5th as many houses, so he/she/it is not doing any extra work.
Of course, this means the Post office needs 1/5th as many trucks. It also means it needs 1/5th the number of delivery workers… and there is the rub.
The official purpose of the post office is delivering mail. The true purpose of all government bureaucracies is to perpetuate the bureaucracy.
The problem with the Post Office is the union doesn’t care about costs or service or how inefficient they are. It doesn’t matter if the mail gets delivered late (or not at all).
Union headcount is the one and only concern. That is the problem
Not to mention less fuel consumed!
It would also make sense to reduce days of service with recent consolidation of sorting facilities — even intra-city post can take several days to be delivered.
This year, postal workers got a 1.3% raise, but that is based on the pre-pandemic wage rate, so it was more like 1.2% Their worthless COLA amounted to about 1.7%. Total raise about 2.9%.
The higher operating costs (7%+) are not due to higher wages, so what are they due to?
It might have something to do with DeJoy’s “transformation” (privatization?) plan. He has basically eliminated air transportation for packages and instead they are being sent by truck.
Since the USPS did not have enough trucking infrastructure in place, it’s likely the increased costs may be due to having to “wing it” to make it work: leased trucks, paying overtime, etc.
Meanwhile, airlines lost the revenue they used to get from the USPS to ship air mail. That may have contributed to higher air fares as that cargo space is now not being used by USPS.
No pushback form the Unions or the public on DeJoy. If he was head of a private company, he would have been fired for lack of promised results. He’s been in his position more than 3 years.
The USPS is certainly helping inflation along. Rates to rent a medium POB have increased significantly over the past 20 years but have been increasingly steep since Louis DeJoy became Postmaster General in June 2020. In 2001, the yearly fee for a medium size POB was $38.
– In 2020, the price for the same box had escalated to $122 annually.
– In 2022, the annual fee had increased to $202.
– In July 2023, the annual fee was $216.
– 2024?
The increased rates may be DeJoy’s way of discouraging their use and getting people to close them. Which would make sense if you realize he eventually wants to close most local post offices and have a select few “retail only” locations for each metro area.
It’s easier to close post offices when you can claim they aren’t being used (nobody’s renting P.O. boxes!). He gave a recent speech saying the average American only visits the post office twice per year.
But if he sold more POB’s then more people would visit the local post offices to pick-up their mail and packages! And perhaps they would buy some stamps also. Or mail a package instead of going to the UPS store. Plus they have a strong passport application business.
No, he is just trying to make as much money as possible.
usps is a broken window
The post office like the military and most of government isn’t expected to make money or anything west of the Mississippi wouldn’t get mail. Always been a laugh because the Post Office goes where no other services go…
What would be worse –
The USPS doing DOD’s job?
Or
The DOD doing USPS’ job?
I’d say the latter.
The military does run a postal system, at least to its own bases and staff. It would be interesting to know if they lose more money delivering mail than the civilian post office?
Both the state department and the military also operates hundreds of schools abroad (bases and embassy staff), which is hundreds more than the Dept of Education (which does not operate a single school anywhere.
How many Dept of Education employees does it take to NOT TEACH a single class anywhere on Earth? For all the rhetoric on setting policy and determining academic ciriculum, is the product any good? How many US students can find Ukraine on a map? How many can find the US?
Join the military and find out where Ukraine is! Then shoot them. You will also learn where Afghanistan is! Then bomb them. Ever wondered where in the world Iraq, Libya or Syria are located? The Dept of Defense knows! And we’ve bombed them all!!
If the USPS had been hired to deliver those bombs priority mail, would they still be in Newman’s truck?
USPS underbid for Amazon deliveries taking them away from the private sector of Fedex and UPS. Essentially the tax payers that work for these private companies
are subsidizing the postal service as are all tax payers to undermine their own standard of living and wages and so on . The USPS cannot do it at the biding price and subsequently will need a bailout again . Last administration called them out on it that they were subsidizing Amazon with deliveries below what they could deliver . Bingo I think they did a 9 billion a while back and will have to continue to subsidize the USPS as far as the eye can see .
Make all junk mail cost 10 times regular mail. If that doesn’t work then double the cost every year until “profitability”.
That would solve the junk mail problem, it would stop.
But it would build a bigger hole in the USPS budget. Read the article again.
The Post Office wants to act like a private business that can generate a profit, but it isn’t. It’s a government-run business, with a legal monopoly on 1st class mail. Government-run businesses, as a rule, almost always run at a loss, and that loss is borne by the taxpayers. They’re not efficient because they don’t have to be efficient.
Responsibility is a matter of need. Personal or corporate. It’s always a matter of need.
It would be interesting to see financial projections for a long term business plan that charged a competitive price for junk mail with commensurate adjustments in operating costs – The USPS might begin to look like UPS, taxpayers would benefit and the public would be spared all the fill in our recycle bins!!
Someone should calculate how much money the USPS is losing by subsidized deliveries of products from communist China. It is ridiculous that Chinese products can come to our doors cheaper than from a neighboring town, state, or closer democratic ally like in Europe. No wonder the US has trouble competing with China, because the CCP is subsidized more than US manufacturers and distributors, largely on this corrupt shipping boondoggle. This is why Temu et al. can do what they do.
Why is the US government supporting a major communist geopolitical foe of the US this way?! PLEASE RAISE AWARENESS.
Note that the cheap China shipping *used* to be due to the IPU (International Postal Union) treating China as a developing country, which it is NOT anymore. But that IPU treatment was finally ended in recent years, BUT then the USPS made some sort of equally outrageously sweet deal with the CCP for cheap shipping. Maybe someone here is more of an expert and can expound further why we are letting Chinese manufacturers steal our lunch money like this.
You may have come across this also, but Congress requires pensions to be paid several years in advance. Mandates that the private sector does not have.
Junk mail destroys 100 million trees and creates 50 million tons of greenhouse gases per year yet climate activists never go after it for some reason. There is also no way to cancel it. I tried with an internet company several times. They have been sending me offers multiple times a month going on a decade. I don’t want their service even if it was free. Nothing I can do about it.
Junk mail It’s bad for the environment, annoys everyone and doesn’t do anything for the economy enough to matter after factoring in the cost to taxpayers with subsidized mail and the cost of these postal workers delivering dead trees nobody wants.
Seems like less cereal and more fresh fruits and vegetables is the way to go. Your wallet, body and brain will thank you.
Typical diversion from real issue, cost of labor /pension rising. BGTW there are days that we do not get mail, more precisley do not get mail for three days and then all that is dumped.
good thing is 2024 is election year
so PAC $$ will deliver needed boost to USPS revenue
of course the legacy retiree costs are killing this business
to bad they can’t do a corporate bankruptcy to help out bottom line
It’s a constitutionally mandated service of the government. It’s not really relevant it loses a few billion dollars, that’s not even a rounding error in our budget.
I have noticed over time that our mail and package deliveries has almost completely shifted to the Amazons, UPSs, and FedExs of this world. On many days, the mail man (it’s usually still a man) delivers only junk mail. Clearly, there is structural change going on here right in our mail boxes. What’s the right answer to this structural change is less clear. While this may be an Un-American approach, maybe it’s time to look to other countries to see what solutions they have adopted.
Is there something where the Post Office is required to report its retirement obligations different from other companies and this makes it look like it is losing more money than it actually is?
OTOH I realized yesterday I used to get about 10 magazines delivered every month and now I get none. And Amazon stopped its magazine kindle subscription for the ones I had.
Yes, goes back to Dumbya Administration.
Maybe the USPS should stop subsidizing private enterprises like Amazon … and I agree with the other comments that the USPS is a national service, just like the military and everything else. It ensures that all people get their mail. And suggestions that privatizing would make it more efficient are bogus. When a service has monopoly power, privatization only enriches the usual suspects. Look at ‘private’ healthcare.
You know private healthcare isn’t exactly the model of privatization here in the US, right? Look at how much federal, state, and local money that healthcare systems receive on an annual basis. That’s hardly factoring in the changes that PACA brought as well as the millions that medicaid/medicare pump into these systems.
Do we ask if the military makes money? No they provide a service for our country. Could they be more efficient and is there waste and fraud? Of course. The Constitution provides for our postal service. SERVICE. I can send a letter from my GA or Florida home where I live to California or anywhere else for 66 cents. What if it cost $1. So frigging what. Go to Fedex or UPS and take an envelope and price it. It’s not even close. Also the postal service is ham strung by Congress. They can’t package up something for you, for a fee. They can’t make a copy for you, for a fee. They can’t notarize something for you, for a fee. They’re in rural areas and can’t sell hunting and fishing licenses, for a fee. They should be able to provide banking services for the unbanked, for a fee. Etc etc etc. I’d love if they made money but they provide a service to my GA house which is only 13 miles in the country and guess what they deliver millions of packages for UPS and FedEx to rural areas at a steep discount because those two for profit corporations take advantage of the fact that the postal SERVICE has to deliver to ever address regardless if it’s cost effective or convenient.
What service does the military actually provide other than helping out in disaster relief efforts?
Arguably, the military does make money. For defense contractors.
Physical mail is useless and a legacy service because it has been replaced by the internet. Only parcel delivery matters.
If you want something to be private, you can still mail a letter. If you send anything over the internet, it’s definitely not private.
Also you can still send certified letters that have to be signed for which guarantees someone got the letter which you can’t do with email.
Finally, at least here in Florida, if you want to renew your drivers license etc you need to show proof of where you live which can only be done by mail being delivered there.
So physical mail isn’t entirely useless.
most of those transactions for legally required purposes. We bought our home without going to a closing out of state using email or other electronic transactions.
I open EVERY one of you daily posts and work. Thanks for this hard work. It is NOT EASY to wade through all of the B.S. and cut to “the chase” in your way. I wish you and yours a Great Holiday season coming up and MORE AND MORE in ’24!
Mish, am I allowed to grab a page-print of some of this content and post it publicly, while giving you credit for that Clip? Your inflation summary is PERFECTLY done and needs to be seen by more people. THANKS,
DH