USPS $1.3B Q1 Loss Raises New Questions About Delivering for America Plan
USPS racks up stunning $1.3B Q1 2026 loss as postal watchdogs and advocacy groups continue calls for Postmaster General David Steiner to drop Delivering for America plan.
The fiscal quarter, which covers October 1 to December 31, is typically the most profitable time of year for the postal service with seasonal surcharges and rate increases and a higher volume of parcels - in fact the same quarter in 2024 saw USPS report a net positive income of $144 million.
That puts the actual year over year comparison for the same period in 2025 at a negative ~$1.4B, putting USPS on track to meet or exceed anticipated 2026 loss of $8.1 billion after reporting a ~$9B total loss for fiscal year 2025.
This change to net loss was attributed to an increase in workers’ compensation expense of $634 million, operating revenue decrease of $264 million, an increase in retiree health benefits expense of $175 million, higher other operating expenses of $169 million, and higher transportation expenses of $43 million.
“While we are pleased that the holiday quarter was quite strong with regard to service improvement as measured by our on-time delivery scores and other important service performance metrics, we continue to face difficult systemic financial and business model headwinds,” said Postmaster General David Steiner.
“To right our financial ship, we are aggressively pursuing growth strategies – which include creating new opportunities for businesses to leverage our vast last-mile delivery network – and driving greater efficiencies throughout our operations. We are convinced that these efforts, if combined with needed regulatory, administrative, and legislative changes, can meet the needs of the American public and return the Postal Service to long-term financial stability and strength.”
Since the launch of previous PMG Louis DeJoy’s 2021 Delivering for America plan, USPS has lost more than $25 billion, even with the passage of 2021 CARES Act, which provided $10 billion, and the Postal Service Reform Act of 2022, which resolved a massive $120 billion in liabilities.
Despite such overwhelming indications that the plan’s shift to favoring packages over mail is not working, USPS is still following the same path, excessively raising prices while reducing service and driving more mail out of the system.
In December, Steiner petitioned the Postal Regulatory Commission (PRC) to provide USPS with unlimited power to raise prices for Market Dominant mail, publicly admitting for the first time that the postal service could be insolvent by February 2027.
Liz Morton
And while the PRC has not weighed in on that petition, they have ruled to limit Market Dominant rate increases to only once per year from March 1, 2026 through September 30, 2030.
Liz Morton
The PRC didn't pull any punches in this ruling, saying the incremental revenue from a second rate hike per year "would at most cover 1-3 days of the Postal Service’s costs, a gap which could be reasonably addressed by even limited cost control measures" while calling on USPS leadership to pursue cost controls, operational efficiency, and service improvements rather than treating captive Market Dominant users as an ATM.
Former Congressman Kevin Yoder (R-Kan.) and current executive director of advocacy group Keep US Posted also had strong words for USPS in light of this latest quarterly report:
“It’s abundantly clear that the Delivering for America plan should be marked ‘return to sender.' We had hoped that Postmaster General Steiner would take a fresh approach and shift away from DeJoy’s tax-and-spend strategy, but so far, he appears to be doubling-down on his predecessor’s failed strategy, even though he has admitted that USPS will be insolvent by early 2027. It’s time for Congress to take up the USPS SERVES US Act, which would restore reliability and affordability, and increase accountability and productivity. Otherwise, USPS is headed for a taxpayer bailout.”
“USPS cannot afford to continue to prioritizing packages over mail and penalizing its biggest revenue generator,” Yoder continued. “The package growth DeJoy sought has not, and will not, materialize. While businesses and consumers have many private sector options for package delivery, we all rely on USPS to deliver the mail, and it’s the only service provider that delivers anywhere in the U.S."
"It’s easy to attribute decreasing mail volume to the growth of digital communication, but the fact is that price increases and productivity declines are pushing even more mail out of the system. The USPS cannot continue to vampirize the mail, its biggest revenue source, and compromise the mail delivery on which both Americans and businesses depend.”
Keep US Posted supports H.R.3004 the “USPS Services Enhancement and Regulatory Viability Expansion and Sustainability for the U.S. Act” (USPS SERVES US Act as an alternative to a taxpayer bailout of USPS.
According to Keep Us Posted, key reforms contained in the USPS SERVES US Act will:
- Limit Rate Hikes: Restricts USPS to one rate increase per year and prohibits price caps without limits.
- Improve Productivity: Reduces USPS rate authority if it fails to improve productivity. Also creates an autonomous Office of the Customer Advocate to hear Americans’ concerns and protect the public.
- Restore Service Quality: Holds USPS accountable for improving efficiency and ties rate authority to service performance. In addition, the legislation makes the PRC's service evaluations binding and requires the PRC to develop its own volume estimation model independent of USPS.
With USPS now openly acknowledging the risk of insolvency within two years, the window for course correction is rapidly closing. Congress, regulators, and postal leadership face a clear choice: continue doubling down on a failed model that drives mail out of the system, or enact meaningful reforms that restore affordability, reliability, and accountability.
