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FY2014: First-Class Mail

Last year, the Postal Service forecast that First-Class Mail volume would decline in the coming year by -6.4 percent and that First-Class Mail revenue would decline by -2.1 percent (see the report here, pg. 4).

However, in 2014, First-Class Mail volume actually declined by only about half of the Postal Service’s forecast—by just over -3 percent, and First-Class Mail revenue rose by nearly 1 percent (see the report here, pg. 2).

  2014 Forecast 2014 Actual
First-Class Mail Volume -6.4% -3.3%
First-Class Mail Revenue -2.1% +0.8%

It is hard to figure out how the forecast was so far from the actual 2014 results. The Postal Service provided no commentary about this discrepancy during its review of 2014 results.

The discrepancy raises some questions about the accuracy of USPS’ fiscal 2015 First-Class Mail forecast.

For fiscal 2015, the Postal Service forecasts another large decline in First-Class mail. According to its recently released 2015 Integrated Financial Plan, the Postal Service expects a 2015 First-Class Mail volume decline of -5.2 percent and a First-Class Mail revenue decline of -3.1 percent.

  2015 Forecast 2015 Actual
First-Class Mail Volume -5.2% TBA
First-Class Mail Revenue -3.1% TBA

In October 2014, First-Class Mail volume was down just -2 percent from the same month a year ago, and revenue was up by nearly 3 percent. Did the Postal Service overestimate the volume decline again this year and underestimate the revenue? With only one month in Fiscal Year 2015 under our belts, it is too early to tell, but we will closely monitor the monthly First-Class Mail statistics.

A better-than-forecast result in this mail class could boost 2015 revenue above the currently forecast $69 billion.

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