U.S. CREDIT RATING DOWNGRADED By Hope Wilkos, Writer/Blogger Photos: Getty Images
Our current economic situation was bound to have repercussions. Unfortunately, one of the results is Standard & Poor’s downgrading of the United States’ credit rating from AAA status which the nation has held since 1917.
The U.S. was already on “CreditWatch with negative implications” due to the debt crisis and indecision on the debt ceiling. S&P are uneasy with the plan recently put into place and maintain that ‘it falls short of what is necessary to stabilize the government’s medium-term debt dynamics.’ The disaccord and disagreement amongst government officials has also given S&P another reason to downgrade the rating.
There are political analysts who feel that S&P reacted too quickly and too sharply. However, in response, S&P believes that the new compromise reached didn’t address one of the nation’s biggest drivers of debt which are Social Security and Medicare and there is also no allowance for additional tax revenue. In addition, there is no current plan to boost economic growth.
So what does this mean for the average consumer? Costs to borrow (credit cards, home and business loans) will be higher and interest rates may rise which will directly affect businesses, individuals and families. The latest statistics reveal that 82% of Americans disapprove of Congress.
Money collected by government now in the form of taxes will go to service the debt rather than where we want it applied. It might also be time to look at how your money is invested for retirement. Look into diversifying your assets.
China, one of the owners of our debt, has sharply criticized the United States and in response to this latest downgrade of the credit rating will be more hesitant to lend to the U.S. in the future.
On a more positive note, the other two credit agencies of Moody’s and Fitch, will continue to affirm the nation’s top rating for now. Based on the release of the latest job and unemployment numbers, job growth is on the rise and the unemployment rate has dipped.
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