In March 2026, the USPS made headlines by announcing it was facing an imminent liquidity crisis and could run out of money within a year. The announcement sent shockwaves and consternation throughout the mailing industry as businesses considered what it would mean if the USPS ran out of cash. It also caused Congress to begin holding hearings to determine what, if any, changes need to be made to the Postal Service’s business model to stabilize its finances and ensure its existence in the future. Let’s take a deeper dive so readers can better understand the USPS’s short-term and long-term financial outlook.
First, a bit of perspective to consider. When you look at what the Postmaster General actually said, which was in his testimony to the House of Representatives on March 17, 2026, it was “[a]t our current run rate and if we continue to pay our required obligations in the same manner as we have done in recent years, then we will be out of cash in less than 12 months.” The important caveat to note in that statement is that the USPS would run out of cash if it continued to pay required obligations.
There have been many years in the past when the USPS did not pay its required obligations, but there was a rule made by the Postal Regulatory Commission (PRC) that required it to make minimum payments into its employee retirement accounts (in exchange for being allowed a Retirement additional rate authority in prior years). So this year, the USPS was unable to defer payment on its obligations and retain liquidity. Read on, however, because that has now changed…
Short-Term Outlook. The PRC recently provided the USPS a total of potentially $15 billion or more in relief through FY2030 and averted the USPS’s “liquidity crisis” in the near term by giving the USPS a waiver on paying the minimum retirement payments until 2030. The PRC said its action offers some “breathing room” and extend any potential liquidity crisis for at least another several years, “providing the Postal Service makes judicious decisions about its expenditures starting now,” it told the House Subcommittee on Government Operations at a June 4, 2026, hearing.
Postmaster General David Steiner acknowledged this at the June 24, 2026, Senate hearing, stating in testimony, “[y]es, short-term deferring of employer contributions to retirement payments, and freeing up the use of restricted cash, has extended our cash liquidity projections.” “However,” he continued, “those actions do not make the Postal Service financially healthy or sustainable.” “The bottom line is that we are out of cash,” he said, “[w]e are borrowing from our employees’ retirement funds to continue operations.” “I am not comfortable with that,” he told the Senate, “our employees are not comfortable with that, and those of you in Congress should also not be comfortable with that.”
For the short-term, however, the USPS’s liquidity position is as stable – or better -- than it has been many times in the past few decades. As of the end of April 2026 (according to the US Treasury), the USPS had about $9 billion in cash ($14 billion if you include the cash that was restricted for the retirement payments). Contrast that with the years between 2007 and 2013 when the USPS had less than $2.5 billion in cash (except for one year when it had $4.9 billion) at the end of each fiscal year. From 2014 to 2020, the USPS rarely had more cash than it does today. Things changed in 2020 when the CARES Act gave the USPS $10 billion in relief during the pandemic, bringing its cash on hand to over $23 billion. But over the last five years, its cash on hand has been significantly depleted, largely through the USPS’s own actions of making historically high capital investments as it modernizes its network.
The Causes of the USPS’s Financial Issues. The USPS would like to blame its financial issues solely on the decline of mail volume and the few remaining constraints on its ability to continue to raise Market Dominant postage prices as much as it wants. But there are other causes that have led to its financial issues and liquidity challenges.
The USPS spent a total of $12 billion on capital projects during the 10-year span of 2010-2020. During part of that period, the USPS froze capital spending to prioritize operational payroll. But since 2021, with the inception of its Delivering for America (DFA) plan, the USPS has spent $14.45 billion on capital investments and plans to spend another $15.6 billion in 2027-2030 (out of $40 billion projected for the 10-year DFA plan). FY2024 marked the highest annual capital investment in the USPS’ history, at $4.199 billion. So it’s easy to see how the significant increase in capital investments has impacted the USPS’ finances and liquidity position.
In addition, the USPS has not managed to achieve significant cost reductions – something that it should be more focused on at a time when it is having financial issues. The USPS earlier this year issued a freeze on all non-essential spending, but it remains to be seen what impact the move may have on finances for this Fiscal Year. An independent economic study submitted in a PRC proceeding earlier this year showed that if the USPS were to reduce its controllable costs by two percent per year, coupled with CPI-cap price adjustments, it would achieve break even status and stabilize its finances by 2030.
There are other factors at play – since nearly 70% of the USPS’ costs are from labor, the size of the USPS’s workforce, types of employees, and productivity/overtime rates all have an impact on its expenses. The USPS’s productivity has fallen to historically low levels over the past few years. The significant decline in mail volume is also an important factor since the last time the USPS was able to cover its expenses was back in 2006-2007 when mail volumes were historically high. As volume has declined, it has impacted the USPS’s ability to use revenue to cover its expenses.
Long-Term Outlook. The long-term outlook for the USPS’s financial position is more of a concern because eventually the USPS will need to start making the required retirement payments again, and the USPS continues to lose money each year. The USPS’ losses since 2007 total $118 billion. It has maxed out its $15 billion borrowing authority. In addition, according to the GAO, OPM projects that the USPS Retiree Health Benefits Fund will be depleted in Fiscal Year 2031, assuming that the USPS makes all the required payments to the fund. After that, if no changes are made, the USPS will need to pay its share of retiree health premiums out of its revenue, which OPM estimates will be about $5.8 billion annually by FY2031.
In addition to its employee retirement expenses, the USPS must continue to provide all the things currently required by law, such as mail delivery six days per week, uniform postal rates anywhere in the country, the continual operating of unprofitable post offices, and delivering to expensive hard-to-reach geographic areas.
Something needs to significantly change in order for the USPS to achieve financial stability in the long-term. As discussed above in the section on causes, there are multiple areas to be addressed to bring the USPS finances back in order: USPS cost reduction, reevaluation of USPS retiree benefits; and changes to capital outlays. Even if the USPS can achieve annual “controllable” income profit, the “noncontrollable” demands on its finances will keep it operating at a loss. The USPS also needs to be able to pay its statutorily obligated payments, which will significantly increase in the next six years.
There is much to consider when looking at the USPS’s future and the need for it to achieve financial stability. The answer likely will lie in multiple approaches – the USPS’s “self-help” initiatives to reduce costs, generating more revenue through its parcel products, and potential legislative changes that impact its retirement structure in the future or its ability to better invest the money in its retirement accounts – all are potential actions being discussed by stakeholders and Congress.
For a Really Deep Dive… As readers may realize, this article attempts to cover only highlights of the USPS’s financial outlook. There are other resources available that take a really deep dive – the Government Accountability Office (GAO) published a 75-page report in December 2025, “U.S. POSTAL SERVICE Action Needed to Fix Unsustainable Business Model.” The USPS Office of Inspector General in June 2024 published the 20-page audit report, “State of the U.S. Postal Service Financial Condition.” The PRC in May 2026 issued its 130-page annual report “Financial Analysis of United States Postal Service Financial Results and 10-K Statement” for Fiscal Year 2025.
Kathleen J. Siviter is the Executive Director of the Alliance of Nonprofit Mailers (ANM) as well as President of Postal Consulting Services Inc. (PCSi), and she has over 30 years’ experience in the postal industry. She has worked for the U.S. Postal Service, Association for Postal Commerce (PostCom), National Association of Presort Mailers (NAPM) and others. She has also worked with PostalVision 2020, an initiative designed to engage stakeholders in discussions about the future of the American postal system.
This article originally appeared in the September/October 2026 issue of Mailing Systems Technology.
