Tuesday, April 19, 2011

'US economic status declining'

Standard & Poor's warns of a decline in the US economic status

Source: Press TV

US Standard & Poor's rating agency (S&P) says America's economic status will likely decline unless lawmakers in Washington take proper measures to control its growing debt.

The agency's attitude toward the United States' overall economic condition changed from “stable” to “negative,” while the S&P experts said they would deny the federal government the AAA rating, which identifies the US as one of the world's safest locations for investments, the Washington Post reported Monday.

The S&P report also reflected a slight decline in the stock prices, as the United States currently faces a nearly $14.3-trillion debt.

“We believe there is a material risk that US policy makers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013,” said the S&P.

“If an agreement is not reached... this would, in our view, render the US fiscal profile meaningfully weaker.”

However, the US President Barack Obama's administration says the agency is acting like a political pundit and that anyone else could also come up with a guess similar to that of S&P's.

“We believe S&P's negative outlook underestimates the ability of America's leaders to come together to address the difficult fiscal challenges facing the nation,” said Mary Miller, the Assistant Secretary of the Treasury for Financial Markets.

“Addressing the current fiscal situation is well within our capacity as a country,” she said.

There are disagreements in the House of Representatives on how to tackle the nation's widening budget deficit.

Obama earlier devised a budget plan that would cut $4 trillion from the deficits over the next 12 years, while the House Republicans laid out a resolution that would come up with a $4.4-trillion cut over 10 years.

Standard & Poor's, along with Moody's Investor Service and Fitch Ratings, make up the Big Three credit rating agencies in the United States, whose assessments influence the investors' decisions worldwide.

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