What exactly is going wrong?
The U.S. Postal Service brought in nearly $20 billion in three months, increased revenue by more than $1 billion and cut its quarterly loss by more than half a billion dollars. It still says its financial future is in serious trouble.
The USPS is warning of a “severe liquidity crisis” despite improving third-quarter results, saying temporary measures are buying the agency time but won’t solve financial problems that postal officials contend require action from Congress and federal regulators.
The numbers illustrate the contradiction. USPS generated $19.9 billion in operating revenue between April and June, up 6.1% from the same period last year. Its net loss narrowed from about $3.1 billion to $2.5 billion, while its controllable loss — a measure that removes certain expenses management says are outside its control — dropped from $1.6 billion to about $1 billion.
That’s an improvement, but it’s nowhere near enough to resolve the underlying problem.
Postmaster General David Steiner said the quarter showed progress in revenue generation, cost control and service improvement, but warned that the Postal Service continues to face a severe cash crunch stemming from what he called systemic problems with its congressionally established business model and regulatory framework.
USPS is now taking steps to conserve cash and “extend our operating window,” Steiner said, while pushing for legislative, regulatory and administrative changes.
Revenue is rising, but mail keeps disappearing
One of the clearest challenges is visible in the Postal Service’s most recognizable product: First-Class Mail.
First-Class Mail generated $6.13 billion during the quarter, up from $5.88 billion a year earlier. But the amount of mail moving through the system declined by 343 million pieces, or 3.5%.
USPS handled about 9.46 billion pieces of First-Class Mail during the quarter, compared with 9.8 billion a year earlier.
Shipping and Packages showed a similar pattern. Revenue increased 7.7% to $8.25 billion even as volume fell 3.4%.
Marketing Mail was an exception, with both revenue and volume increasing. Revenue climbed 12.3% to about $4.02 billion, while volume increased 4.3%.
Overall, USPS handled about 25.43 billion pieces during the quarter, only slightly more than the 25.33 billion handled during the same period in 2025.
Price increases contributed to higher revenue in First-Class Mail and Marketing Mail. USPS also implemented a temporary transportation-related price increase for certain shipping products in April.
Expenses still exceed revenue by billions
Even with $19.9 billion in quarterly operating revenue, USPS reported $22.5 billion in operating expenses.
Expenses increased $438 million, or 2%, from the same period last year.
Higher retirement benefits, retiree health expenses, compensation and benefits and rising fuel costs all contributed to the increase. A favorable change in workers’ compensation expenses partially offset those increases.
The Postal Service’s GAAP net loss for the quarter was $2.514 billion.
USPS officials argue that some of those costs don’t accurately reflect the performance of the day-to-day postal operation. Its controllable loss excludes certain retiree health, workers’ compensation and pension-related expenses that management considers outside its control.
Even under that measure, however, USPS lost $1.038 billion during the quarter.
Chief Financial Officer Luke Grossmann said the organization reduced 4 million work hours during the quarter while continuing efforts to increase revenue and control expenses.
But he said management actions alone won’t fix the Postal Service’s finances.
USPS is already delaying some financial obligations
The urgency becomes clearer in the steps USPS has taken to preserve cash.
The Postal Regulatory Commission granted a temporary conditional waiver in April for required payments toward annual pension amortization obligations. USPS also suspended biweekly normal-cost contributions for employees covered under the Federal Employees Retirement System.
Those actions allowed USPS to defer approximately $1.4 billion during the quarter.
But that isn’t $1.4 billion in savings.
The pension obligations eventually must be paid, and USPS acknowledged that the temporary measures don’t provide a long-term solution. Its liquidity remains “precarious,” according to the agency.
The Postal Service is also facing a $726 million retiree health benefits top-up payment calculated by the Office of Personnel Management and due Sept. 30.
USPS says Congress needs to act
The Postal Service is asking Congress and federal officials for several changes, including an increase in its statutory borrowing limit.
USPS currently has a $15 billion debt limit, a ceiling it says hasn’t been increased since 1992. Postal officials want greater borrowing capacity to fund operations and investments while competing with private companies that have broader access to credit and capital markets.
The agency is also seeking changes to how certain Civil Service Retirement System costs are allocated between USPS and the federal government, greater flexibility to invest pension assets in market-based instruments and changes to workers’ compensation administration.
It is simultaneously asking the Postal Regulatory Commission for greater regulatory flexibility.
Without those changes, USPS offered an unusually stark assessment of where things stand: Its financial outlook “remains dire.”
The stakes extend beyond another quarterly loss. USPS is required to be self-financing and generally receives no tax dollars for operating expenses, relying instead on postage, products and services to support a network delivering to more than 170 million addresses six and often seven days a week.
For now, the agency is generating more money, controlling more of the costs it can control and losing less than it did a year ago.
The problem is that it’s still losing billions — and some of the steps keeping cash inside the organization today are simply pushing obligations into the future.
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