US Post Office Loses $6.5 Billion, Postmaster Blames Inflation And Junk Mail
Authored by Mike Shedlock via MishTalk.com,
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
CPI month-over-month data from the BLS, chart by Mish
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