US Credit Warning

Describing the current budgeting process as not sustainable, Standard & Poor’s issued a warning recently that the US government must do more to curb its deficit. The implication is that America’s vaunted triple-A rating could be in jeopardy. Should the credit rating suffer a downgrade, the cost to service America’s debt would increase substantially.

With respect to dramatic spending cuts to reduce the deficit, observers fear the economy is still too weak to suffer the shock and there is a worry that this could lead to a recession “double-dip”. Still, credit rating agencies are placing pressure on the administration to draft a plan that is endorsed by Congress and sets the country on a path to a more prudent fiscal reality.

Source: The Canadian Press

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