U.S. likely to lose top rating: economists

WASHINGTON/LONDON (Reuters) - The United States will lose its top-notch AAA credit rating from at least one major rating agency, according to a Reuters poll that also found wrangling over the debt ceiling has already damaged the economy.

 

A small majority of economists -- 30 out of 53 -- surveyed over the past two days said the United States will lose its AAA credit rating from one of the three big ratings agencies -- Standard & Poor's, Moody's or Fitch.

 

Respondents saw a 20 percent chance of a new recession over the next year, a prospect that some economists say has been compounded by the acrimonious political fight over what is normally a procedural legislative vote on the debt.

 

Lawmakers have one week left to hash out a deficit-cutting plan without which Republicans in Congress have said they will not raise the legal $14.3 trillion debt limit, risking a potentially devastating government debt default in August.

 

"We believe that Congress will act with an 11th hour deal to raise the debt ceiling. However, the risk of that deal failing increases with each passing day," said Guy LeBas, director at Janney Capital Markets.

 

"I would say that the chance of a U.S. ratings downgrade is now more likely than not."

 

Economists still see the probability of an outright default on U.S. Treasury bonds as remote -- 5 percent on median.

http://link.reuters.com/nyc82s

 

Downgrade and default would have vastly different consequences. A ratings cut might raise the risk of recession by hurting confidence, but might allow financial markets to muddle through the next few months without incident. A default, however, would send shockwaves through the global financial system that could kick-start a new financial crisis, analysts say.

Even if this worst-case scenario is not borne out, a firm majority of respondents -- 38 out of 54 -- said the uncertainty brought about by the political acrimony over the debt has already hurt economic growth.

 

The U.S. economy had already been under stress in recent months. Gross domestic product expanded just 1.9 percent in the first three months of the year, and the second quarter is not expected to have fared much better. Industrial production has slowed and employment nearly ground to a halt in the last two months. The jobless rate climbed to 9.2 percent in June.

 

"This whole debt ceiling debate doesn't seem to be making anyone any more confident," said Sean Incremona, economist at 4Cast Ltd. in New York.

 

Goldman Sachs argued in a research note recently that the decline in consumer sentiment over the last few months has been disproportionate to the economy's slowdown, pegging the debt battle as a culprit.

The government's first reading on GDP in the second quarter will be released on Friday.

 

more

http://news.yahoo.com/u-likely-lose-top-rating-economists-000214380.html

Comment

You need to be a member of 12160 Social Network to add comments!

Join 12160 Social Network

"Destroying the New World Order"

TOP CONTENT THIS WEEK

THANK YOU FOR SUPPORTING THE SITE!

mobile page

12160.info/m

12160 Administrators

 

Latest Activity

Doc Vega posted a blog post
yesterday
tjdavis posted a photo
yesterday
james will is now a member of 12160 Social Network
yesterday
Burbia replied to cheeki kea's discussion Tartaria
yesterday
Burbia posted a video

Mossad: we create a pretend world, we are a global production company... the world is our stage

60 Minutes interviews alleged Mossad agent"we create a pretend world, we are a global production company......the world is our stage."_______________________...
yesterday
Doc Vega posted a blog post

The Alvin II Encounter: Was There A Living Dinosaur Involved?

The year is 1965 in the Caribbean islands at a 5-thousand-foot depth in the dark Atlantic waters.…See More
Tuesday
Doc Vega posted blog posts
Monday
rlionhearted_3 posted photos
Monday
Burbia posted a video

All In The Family | Mike Meets Archie For The First Time | The Norman Lear Effect

Gloria (Sally Struthers) has a new boyfriend called Michael (Rob Reiner) and she is very excited to introduce him to her parents (Carroll O'Connor and Jean S...
Monday
Shawn H is now a member of 12160 Social Network
Monday
Doc Vega posted a photo

entitlement

Congress makes Social Security that we paid in our whole lives into to some government giveaway and…
Sunday
Doc Vega posted a blog post

Death Threats for Assisting ICE?

An Idaho Bar Helped ICE And Faced This Sick Backlash From DemocratsDecember 10, 20254 minute read…See More
Sunday
tjdavis posted videos
Sunday
Sandy posted a video

'They’re Waiting for Us to Die': Area 51 Veterans Plead for Trump’s Help | Elizabeth Vargas Reports

Congress quietly killed the one fix that could have helped America’s “Area 51 veterans” prove where they served — and get the care they say they’ve earned.WA...
Sunday
tjdavis posted a blog post
Dec 13
tjdavis favorited Burbia's video
Dec 12
tjdavis favorited rlionhearted_3's photo
Dec 12
cheeki kea favorited tjdavis's blog post Under An Ionized Sky
Dec 12
cheeki kea commented on Doc Vega's blog post To Each and every One of you here Happy Thanksgiving
"Hope you enjoyed your thanksgiving day. I've often thought it'll good if I could send…"
Dec 11
cheeki kea posted a photo
Dec 11

© 2025   Created by truth.   Powered by

Badges  |  Report an Issue  |  Terms of Service

content and site copyright 12160.info 2007-2019 - all rights reserved. unless otherwise noted