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U.S. Postal Service Hikes Stamp and Mail Prices

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By Jon C. Ogg Published
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USPS Sorting Center
courtesy of USPS
The U.S. Postal Service (USPS) claims to be a self-supported government enterprise that receives no tax dollars for operating expenses. Somehow, it keeps operating at losses, it keeps having severe pension issues and it cannot seem to operate like a normal business. How the USPS has never gone bankrupt or been declared formally insolvent is a mystery to many Americans, short of that government backstop of course.

Now your friends at the Postal Service are delivering one more unpleasantness. This is not exactly a bill. It is a price hike for mail.

Starting in January of 2014, the USPS is hiking its cost of a First Class single-piece of mail to $0.49 from $0.46 today. These proposed changes are intended to generate $2 billion in incremental revenue annually for the USPS. The Governors of the Postal Service voted this week to increase prices above the typical annual increases associated with changes in the Consumer Price Index.

The cost of a standard letter rises to $0.49 from $0.46, and additional ounces will rise a penny to $0.21. Letters to all international destinations will now be $1.15 per send out, and the super-cheap postcard rate will rise by a penny to $0.34.

More price hikes are coming for packages as well. The USPS said:

Stamp prices have stayed consistent with the average annual rate of inflation of 4.2 percent since the Postal Service was formed in 1971. Pricing for Standard Mail, Periodicals, Package Services and Extra Services also will be adjusted as part of a filing to the Postal Regulatory Commission scheduled to take place September 26.

The USPS admitted that it posted an unacceptable $15.9 billion net loss last fiscal year. It also projected that it will have a loss of roughly $6 billion in the current fiscal year. Another confession is that the USPS “has an intolerably low level of available liquidity even after defaulting on its obligation to make prefunding payments for retiree health benefits.”

And why did Congress block the Saturday mail delivery again? The full rate hike news is here.

Photo of Jon C. Ogg
About the Author Jon C. Ogg →

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. a673b.bigscoots-temp.com.

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