The U.S. Postal Service ended its third fiscal year quarter (April 1 - June 30) with a greater-than-expected net loss of $1.1 billion. "The national economic slowdown reduced mail volume at an accelerated pace and continued inflation in fuel prices produced rapidly escalating transportation costs," according to the USPS press release.

For the third quarter ending June 30, 2008, operating revenue was $17.9 billion, a decrease of $437 million, or 2.4 percent, compared to the same period last year. Operating expenses increased 1 percent.

Mail volume was 48.5 billion pieces, a 5.5 percent drop from the same period last year. First-Class Mail and Standard Mail volume were each down 5.5 percent in the third quarter, reflecting the challenging economic environment.

"When the economy does rebound, mail volume may not return to previous levels," said Postmaster General John Potter. "This requires that we significantly accelerate process improvements and the realignment of resources in order to achieve long-term financial success. Failure to do so will threaten our ability to meet our mission of providing universal service at affordable prices."