Tags: Moodys | US | AAA | Rating | Risk

Moody's: US AAA Rating at Risk

Wednesday, 26 May 2010 11:32 AM


  Comment  |
   Contact Us  |
|  A   A  
  Copy Shortlink
The United States' AAA rating continues to be stable, even though the government's finances have weakened from the cost of supporting the country's financial system and economy, Moody's Investors Service said.

The U.S.'s top rating could eventually come under pressure unless additional measures are taken to reduce projected record budget deficits, the agency warned.

The rating is backed by the country's ranking as the world's largest economy as well as its flexible markets and open trade regime, Moody's said in a statement that was worded similarly to other regular statements made in recent months.

A stable outlook indicates the rating agency views the AAA rating as unlikely to come under pressure over the next 12 to 18 months.

Concerns over government debt levels have risen as fiscal woes faced by peripheral euro zone nations led the European Union and International Monetary Fund to announce a nearly $1 trillion lifeline for heavily-indebted countries such as Greece, Portugal and Spain.

The United States' finances have been substantially worsened by the credit crisis, recession, and government spending to address these shocks, Moody's said.

The U.S. budget deficit widened to $1.4 trillion in 2009 — roughly 10 percent of the annual gross domestic product — and the White House projects the deficit this year will hit $1.6 trillion.

President Barack Obama has named a panel of outside experts charged with recommending ways to improve the nation's fiscal position in an effort to show he is serious about stemming deficits.

"The ratios of general government debt to gross domestic product and to revenue are deteriorating sharply, and after the crisis they are likely to be higher than the ratios of other Aaa-rated countries," Moody's said.

The ratio of debt to revenue has more than doubled over the past three years, reaching well over 400 percent and indicating potential stress on government finances in the future, Moody's said.

Much of the deterioration in these ratios, however, has come from asset purchases including equity investments, Moody's said. This means that the rising ratios have less impact on the country's net worth, the agency said.

The rating could come under pressure if the upward trend in debt ratios and interest costs continues and measures to stabilize them are not taken, Moody's added.

© 2014 Thomson/Reuters. All rights reserved.

  Comment  |
   Contact Us  |
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
Zip Code:
Privacy: We never share your email.
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Rand Paul Answers McCain: Let's Not Get Personal Over ISIS

Wednesday, 17 Sep 2014 23:03 PM

Sen. Rand Paul says he doesn't want to get personal in his response to an attack on Monday by Sen. John McCain, who said . . .

Pope Faces Serious Islamic Threat on Albanian Trip

Wednesday, 17 Sep 2014 22:26 PM

Concluding his weekly catechesis in St. Peter’s Square Wednesday, Pope Francis asked the faithful to accompany him in pr . . .

Rep. Chaffetz: Feds Clueless on Terror Suspects Who Entered US

Wednesday, 17 Sep 2014 22:19 PM

Rep. Jason Chaffetz expressed concern Wednesday that Homeland Security Secretary Jeh Johnson claimed to know little abou . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

America's News Page
©  Newsmax Media, Inc.
All Rights Reserved