WASHINGTON?Battered by the terrorist attacks and a declining economy, the Postal Service saw its first drop in volume in a decade and finished the fiscal year with a $1.68 billion loss.

Managers are scrambling to cut expenses, seeking help from Congress and discussing the possibility of speeding up a rate increase.

“The economic recession, the Sept. 11 attacks and the anthrax attacks tossed our financial situation up in the air,” Postmaster General John Potter said Tuesday.

Figures for the year that ended Sept. 30 show the agency with an income of $65.8 billion and expenses of $67.5 billion. It was the second consecutive year the agency finished in the red, after making profits for five years.

Mail volume for the year totaled 207 billion items, down about 400 million from the year before. In the first two months of this fiscal year, volume remains sharply lower.