The U.S. Postal Service reported a $2.5 billion net loss for the third quarter of 2026 on Friday, underscoring its continuing financial struggles as postal officials race to prevent the agency from running out of cash as early as next year.

Although the latest figures represent an improvement over the same period last year—when the Postal Service posted a $3.1 billion loss—the agency remains deeply in the red.

USPS attributed the smaller deficit in part to a $416 million reduction in workers’ compensation expenses, along with a $1.1 billion increase in operating revenue. Even with those gains, however, the agency continues to face substantial financial challenges.

Operating revenue totaled $19.9 billion during the quarter, reflecting a 6.1% increase compared with a year earlier, though it slipped from $20.2 billion recorded in the previous quarter.

“The Postal Service is today continuing to face a severe liquidity crisis, and our financial losses this quarter reflect systemic challenges inherent in our Congressionally established business model and regulatory framework,” Postmaster General David Steiner wrote in a statement Friday.

Steiner previously warned the Associated Press in March that, without significant changes, the Postal Service is projected to exhaust its cash reserves by early 2027.

The agency is currently limited by a $15 billion federal borrowing cap that has remained in place since 1990. As expenses continue to rise, postal officials say they have increasingly relied on operating revenue to offset mounting losses.

During a March 17 hearing before a congressional subcommittee, Steiner proposed increasing the price of a First-Class Forever stamp from 90 cents to 95 cents, arguing that postage remains one of the Postal Service’s most important sources of income.

“If we were to change the stamp price to 90 to 95 cents, which is still less than half of the cost of most foreign posts, that would largely solve our controllable loss,” Steiner told House Oversight and Government Reform Committee.

Steiner has also opposed bipartisan legislation in the Senate that would establish more than 70 additional ZIP codes. In a December 2025 letter to Sen. Rand Paul (R-Ky.), who also chairs the Senate Homeland Security and Governmental Affairs Committee, Steiner warned that the proposal would cost the Postal Service an estimated $800 million.

Earlier this year, USPS temporarily suspended its employer contributions to federal pension programs as part of broader cost-cutting efforts. The agency also approved another postage increase, raising the price of a First-Class Forever stamp by four cents beginning in July.

“We are taking responsible steps to conserve cash to extend our operating window, but we require thoughtful legislative and other actions to establish a financially sustainable Postal Service capable of serving the American public far into the future,” Steiner wrote in Friday’s statement.