Citing the strength of the U.S. economy and the dollar’s standing in the world, Standard & Poor’s on Monday raised its outlook on the U.S. credit rating — even as the ratings agency said Washington lawmakers have a “lesser ability” than others countries’ to deal with public finance pressure in the long term.
S&P raised its outlook on the country’s long-term credit rating to stable from negative, and said the U.S. has less than a one-in-three chance of another downgrade in the near term.
U.S. equity markets seesawed Monday, after initially rising in the wake of the S&P news. The Dow Jones Industrial Average DJIA -0.06% and the S&P 500 SPX -0.03% were both in negative territory mid-Monday afternoon.
S&P on Monday also reaffirmed its AA+ long-term sovereign credit rating on the U.S.
The ratings agency said that it has seen “tentative improvements” on two fronts. It cited the year-end fiscal cliff deal between Democrats and Republicans that put in place tax increases and spending cuts. And, S&P said, stronger-than-expected private-sector contributions to economic growth combined with increased payments to the government from Fannie Mae and Freddie Mac have led to downward revisions of U.S. deficits.
Even as the deficit outlook improves, however, the ratings agency factors into its AA+ rating what it called a “lesser ability” of U.S. lawmakers to tackle public-finance pressures in the long term.
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