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I had to buy some stamps today -- a thing I haven't done in quite a while. I was surprised by how expensive they were ($0.78). This got me to thinking about what it would be like to measure inflation solely by the US postal rate.
Between 1925 ($0.02) and 2025 ($0.78), the U.S. first-class postage rate grew at an average nominal rate of about 3.7% per year.
Now, this is an average and the reality is more lumpy. I made a chart:
Unfortunately, the US postal service does not actually charge what it costs to deliver the mail (I'm simplifying things a little, apparently the post office does more than deliver the mail). However,
Since the 1971 Postal Reorganization Act, USPS has been a self-funding agency, relying almost entirely on revenue from postage, products, and services—not taxpayer support—for its operations. source
And indeed this wonderful chart shows us how much money the post service has been losing lately:
So, now what we need to do is figure out how much stamps would have cost if they weren't being subsidized every year. Based on the number of pieces of mail delivered each year and the losses showed in the chart above, I got chat to predict how much the USPS should have been charging.
USPS would have needed rates 2–6¢ higher per letter on average to break even. In extreme deficit years (like 2011), the gap was closer to 9¢.
So, if we assume that the postal rate should currently be $0.04 higher than it is, we come up with an inflation rate over the last 100 years of $0.79 -- which isn't that much higher than what I had figured earlier.
Comparing this with the official CPI rate:
  • According to CPI data, $1 in 1925 would be worth about $18.46 today. source
  • This corresponds to an average annual inflation rate of 2.96% per year over that period
I guess you can add the postal rate inflation to your list of other inflation indicators (if you find that kind of thing useful). But you probably don't need to worry about adjusting for whatever subsidy the USPS gets.
102 sats \ 0 replies \ @Oxy 9h
Your postal rate calculation is a great example of how different data points can tell slightly different stories. It's cool to see that even with the USPS's financial struggles, the stamp price inflation rate aligns pretty well with the CPI over the long term.
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This is a really fun post. I was last aware of postage prices as they approached 50 cents.
At some point, I heard that without the revenue they make stuffing our boxes full of garbage we don't want, each letter would cost a dollar more.
Maybe you can get another curve for what they'd have to charge to break even without junkmail. I don't think junkmail was a thing back in 1862.
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Very cool to see. Thanks for this
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we come up with an inflation rate over the last 100 years of $0.79
Seems like you meant to write something else here.
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ah, shucks. yes, I meant 3.79%
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That’s actually high !
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Nice work!
I think I will stick with the Big Mac index
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