Last week first class postage increased from 41 to 42 cents. Surprised?
Most people I talk to are unhappy but resigned about the increase. Why expect efficiency from a legally protected monopoly? Realistically, many costs have fallen. So why are rates rising?
We all know about energy prices. But that’s just a recent issue. One real answer is that the Postal Service has finally been ordered to fund its benefit packages. And mail volume isn’t growing fast enough—owing especially to email—to keep the Postal Service growing.
But as the real cost of mail rises, consumers will find alternatives. Spam used to be junk-mail. And my spam-filter works just fine. In the meantime, the Postal Service seems to be entering a death spiral of rising costs, rising prices, and lower volume.
In any case, I expect accelerating price increases going forward. Four-dollar letters, anyone?
Douglas R. Tengdin, CFA
Chief Investment Officer
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