Slip-Sliding Away?

As the U.S. economy continues to unravel, the looming question for the U.S. Postal Service is how significantly a recession could rock mailer spending -- and ultimately the state of USPS finances.

Especially in the first full year of operations under the new postal law and PRC rules, which generally limit postal price hikes in mailing services (which constitute 90 percent of postal revenues) to inflationary changes, regardless whether USPS revenues go up or down.

The first indication of how bad a bite the economic downturn may take out of USPS revenues will be revealed next Wednesday, January 30, at the next meeting of the USPS Board of Governors.

That will come when USPS Chief Financial Officer H. Glen Walker reports on the financial results of the most recent quarter (October - December, 2007). That period historically represents the largest quarter of USPS receipts, due to holiday-related mail volume, both in first-class and advertising mail.

Retailer data on 2007 holiday sales show that the period was a setback for many merchants, with 2007 the weakest year since 2002. Since then, consumer spending has remained sluggish, and could continue at a dismal pace into 2009, experts say. Consumer spending is a bellweather for the economy and generally reflects the direction of advertising spending using the mail, and upon which postal revenues are increasingly reliant.