Figure 3-2 First-Class Mail Volume — Selected Components

Figure 3-3 Delivery Points and First-Class Mail

of pieces delivered per stop, combined with shrinking revenue per piece delivered, increases the burden the Postal Service must shoulder to carry out its universal service obligation. It will become ever more costly to support the infrastructure and personnel costs associated with the Postal Service's universal service obligation as these trends continue.

Mail volume growth and revenue growth are dependent on the economy, the underlying demand for postal services, and the attractiveness of competitive alternatives. Growth in economic activity, as measured by gross domestic product (GDP) and retail sales, picked up in 2003 and has continued to build in 2004, although it weakened in the second half of the year. Within the parameters of the Postal Service fiscal year, the GDP finished 2004 with an annual growth of 4.5 percent with continued gains in retail sales. However, in retail sales, growth is projected to slow from 5.1 percent in 2004 to 1.8 percent in 2005.