New York – Standard & Poor’s Ratings Service has lowered its long-term outlook for the United States’ sovereign debt to “Negative” from “Stable” due to risks from the country’s growing deficit.
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But the agency also reaffirmed the investment-grade credit ratings on country’s long-term and short-term debt.
S&P says the U.S. has a high-income, diversified and flexible economy that has helped it to encourage growth while containing inflation. But the country’s ballooning deficit could offset those positives over the next two years.
The agency noted that the deficit grew to 11 percent of gross domestic income in 2009. That is much higher than the average of 2 percent to 5 percent in the previous six years.
These rating agencies are a joke. First they miss all the big bank failures and in fact contributed to the problem with their phony ratings on the collateralized mortgage securities. Now they try to look tough on the federal debt AFTER both sides have agreed upon the magnitude of needed savings and are on the cusp of some historic structural changes in the budget and taxes.