The United States Postal Service (USPS) posted a net loss of $1.9 billion in the second quarter of FY 2009, as revenue and volume declined in all mail categories. The Postal Service has posted net losses in 10 of the last 11 fiscal quarters. USPS attributes its losses to a decrease in mail volume brought on by the ailing economy. Postal Service Total Factor Productivity dropped by 2.0% in 2Q09 — one of the sharpest declines in TFP in the last decade. The chart on page 3 illustrates some concerning trends in USPS productivity.
On May 11, USPS enacted price increases on First Class Mail, domestic postcards, parcels, large envelopes, and international mail. Despite the price increases, USPS projects a year-end budget deficit of nearly $6 billion by the end of 2009. The agency has continued to show renewed interest in broadening its product line in order to become financially viable.
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