Trendpills
The United States is preparing to phase out its most iconic coin, the penny, with the U.S. Mint expected to cease production for circulation by early 2026. The decision stems from long-standing economic concerns, as the cost to produce the one-cent piece has significantly outpaced its face value for years.
The primary driver behind this move is financial. In 2024, the Treasury reported a seigniorage loss of $85.3 million on penny production alone. Reports indicate that minting each one-cent coin costs nearly four cents, a deficit attributed to the rising prices of raw materials, primarily zinc and copper, as well as manufacturing and labor expenses. The U.S. Mint has reportedly made its final order for penny blanks, signaling the final stages of the coin's production run.
With the penny's departure, a significant change will occur in daily commerce. An analysis of the potential impacts of phasing out the penny suggests that businesses will likely begin rounding cash transaction totals to the nearest five-cent increment. This practice, already common in countries that have eliminated their lowest-denomination coins, is intended to simplify transactions, though it raises questions about its net effect on consumers and retailers.
The penny has been a fixture of American currency since the U.S. Mint’s establishment in 1792. It was one of the first coins minted by the fledgling nation. The current design features President Abraham Lincoln on the obverse, a portrait in use since 1909, and the Union Shield on the reverse. The U.S. Mint states the shield represents Lincoln's legacy in preserving the United States as a single, unified country. While the coin's retirement marks the end of a numismatic era, it reflects a pragmatic response to modern economic realities.
