Standard & Poors Lowers U.S. Outlook from “Stable” to “Negative”:
Rating agency Standard & Poor’s lowers the long term outlook for U.S. federal government’s credit health.
Standard & Poor’s lowered the long term outlook for federal government’s economic and fiscal health today (Monday April 18 2011). The Standard & Poor’s rating agency’s new change marks the first time that the U.S. could possibly damage it’s credit rating significantly. The call by Standard & Poor’s means U.S. credit could be at a turning point for global investors. The S&P ranked the fiscal solvency of the U.S. government from “stable” to “negative” and the change signals a problem based on the budget battle and the forecast on how or when it will be resolved. The deficit problem is taking center stage.
The U.S. federal deficit has reached it’s highest levels and the current politics regarding several possible government shutdowns hasn’t helped the overall outlook of the U.S. credit situation. The downgrade of the U.S. fiscal outlook by a major rating agency does have consequences that ring abroad and elsewhere. The call from S&P may have lead to the downward climb in stocks today and the longer term outlook regarding the deficit may continue to make headlines and add to already negative sentiment caused by inflation as well as QE2′s end/tax talk.
