USPS Deficit Shrinks

By Paul Ausick Updated Apr 28, 9:10AM EDT · Published Feb 8, 1:22PM EST

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USPS Sorting Center

The U.S. Postal Service said today that its fourth-quarter deficit totaled $1.3 billion. That’s $2 billion less than the deficit the service ran in the fourth quarter of 2011. The USPS said that a decline in first-class mail and the Congressional requirement that the Postal Service fully fund its retirement fund for the next 75 years are the major factors behind the string of losses.

Operating revenues in the fourth quarter were down just 1%, to $17.7 billion as holiday cards and packages boosted sales. Package shipments rose 4.7% in the quarter, but first-class mail dipped 4%.

The recent announcement that the USPS would end Saturday mail delivery is expected to save $2 billion a year, but that decision still needs Congressional approval and that is not something the USPS can assume will be forthcoming. Congress has expressly denied the Postal Service’s attempts to shut down its Saturday delivery on every previous ocassion.

The biggest problem the USPS faces is the pension pre-funding requirement established in 2006, which forces the Postal Service to provide for the retirement benefits it may have to pay for employees it hasn’t even hired yet. No other entity, public or private, must meet such a requirement. The USPS currently allocates more than $5 billion a year to its pension requirement.

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About the Author Paul Ausick →

Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.