S&P Pats U.S. On The Back — Raises Outlook
June 10, 2013 by UPI - United Press International, Inc.
NEW YORK (UPI) — Credit analysts at Standard & Poor’s said Monday the United States deserves slightly higher regard, changing a “negative” status to “stable.”
A negative status implied there was a considerable chance the credit rate would fall. Currently, S&P’s rating for the United States is AA plus.
S&P is the only one of the big three rating companies, including Moody’s Investors Services and Fitch Ratings, to ever lower the U.S. rating below AAA, the highest ranking.
S&P lowered the U.S. rating during the debt ceiling debate in August 2009 in which Republicans stonewalled what had otherwise been a routine matter of raising the debt ceiling.
Republicans at the time were trying to call attention to the nation’s debt.
Some considered the downgrade to AA plus with a negative outlook, which jolted stock markets at the time, to be self-inflicted.
S&P specified then that the gridlock in Washington contributed to the downgrade. On Monday, while moving the rating to AA plus with a stable outlook, the rating service said political bickering was still an issue. But “we don’t think the brinkmanship will get worse,” said Nikola Swann, the company’s top U.S. analyst.
In addition, if Republicans stonewall the next debt ceiling debate, S&P said federal spending levels and revenues would not be likely to change, so the effect on the economy would probably be negligible.
“S&P’s bump of the U.S. outlook from negative to stable is not a meaningful event on its own. But it is important as an acknowledgment of just how much the U.S. environment is improving,” Sean West, U.S. policy director for the Eurasia Group, said.
Bottom line, the rating service said the U.S. Federal Reserve has “both the strong ability and willingness to support sustainable economic growth and to attenuate major economic or financial shocks.”