US Post Office Loses $6.5 Billion, Postmaster Blames Inflation And Junk Mail

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.