Post Office Reports Record Loss of $15.9B

By Doug Short
November 15, 2012

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First Class Postage Across Time

Earlier this year I spotted a fascinating study at "The Economist" of the cost of snail mail in Europe, North America and Australia. Of the eighteen countries documented in the article, the US has the cheapest first class stamp.

So it came as no surprise when I saw this morning's news item that the US Post Office reported a record loss $15.9B for their fiscal year, which ended on September 30th. The Associated Press news release, courtesy of Google, is available here.

The news reminded me of a chart I created, but ultimately didn't use, at the Retirement Income Industry Association Spring Conference in March. The subject of my conference presentation was demographics and the economy, with a special focus on the aging Boomer cohort. Here is my unused snapshot across time of first class postage in the US.

For the first 32 years of the 20th century, the rate for the first ounce of a first class letter was two cents. The price rose to three cents (a 50% increase) for about 20 months during the US participation in the First World War. In July of 1932 the price again rose to three cents and remained at that price until August of 1958 — a 26 year stretch that included the infancy and childhood of about two-thirds of the Baby Boomers.

The price of a first-class letter then began climbing an irregular staircase to today's 45 cents.

In real terms, adjusted for inflation, postage has oscillated in a fairly narrow range for the past forty years. But now, with the advent of email and all manner of electronic transactions, bill-paying, fund transfers, etc., it's difficult to understand why US postal rates remain such a bargain in the developed world. The Economist blames it on politics: "Congress recently prevented the US Postal Service, which loses $25m a day, from closing some branches and ending Saturday delivery."

In preparation for the fiscal cliff-dive set to commence in just a few weeks, it might be wise for snail-mail aficionados to stock up on Forever/45-Cent Stamps ... assuming that the USPS might have to start running like a real business.

For a convenient table of rates, see the Wikipedia entry on the history of US postage rates.

 

 

 

 

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