NEWS PICKS
CLIP 07 SHALANDA YOUNG ON US CREDIT RATING. ‘OF COURSE WE’RE CONCERNED.
CURRENT CREDIT RATING:
- Standard & Poor’s rates the US credit rating as AA+ with a stable outlook.
- Moody’s rates the US credit rating as Aaa with a stable outlook.
- Fitch rates the US credit rating as AAA with a stable outlook.
If the US credit rating is downgraded, there may be a number of potential consequences for consumers. Here are some examples of what consumers might expect in such a scenario:
- Interest rates may rise: If the US credit rating is downgraded, it may become more expensive for the government to borrow money. This could cause interest rates to rise, which could make it more expensive for consumers to borrow money as well. This could impact mortgages, car loans, credit card debt, and other forms of consumer credit.
- Stock market may fluctuate: The stock market is often sensitive to changes in economic conditions, and a downgrade in the US credit rating could cause stocks to become more volatile. This could impact retirement savings and investment portfolios.
- Currency exchange rates may fluctuate: A downgrade in the US credit rating could also cause the value of the US dollar to decline relative to other currencies. This could impact the cost of imports and exports, as well as travel and other international transactions.
- Confidence in the US economy may decline: A downgrade in the US credit rating could also damage confidence in the US economy and its ability to repay its debts. This could cause businesses and consumers to become more cautious in their spending and investment decisions, which could impact economic growth.
- Impact on government benefits: A downgrade in the US credit rating could also impact government benefits, such as Social Security, Medicare, and Medicaid. These programs rely on government funding, and a downgrade could make it more difficult to fund them at current levels.
- There are several potential negative impacts that can occur, including:
- Higher interest rates: When the US government raises the debt ceiling, it may need to borrow more money to finance its operations and pay off existing debt. This can lead to an increase in the supply of US Treasury bonds in the market, which can drive up interest rates. Higher interest rates can make it more expensive for businesses and consumers to borrow money, which can slow down economic growth.
- Reduced confidence in US financial stability: Raising the debt ceiling can sometimes be seen as a sign that the US government is not able to control its spending and debt levels. This can erode confidence in the US financial system and make investors less willing to invest in US Treasury bonds. This can further drive up borrowing costs and make it more difficult for the government to finance its operations.
- Inflationary pressure: Raising the debt ceiling can lead to an increase in the money supply, which can contribute to inflation. If the government is borrowing more money to finance its operations, it is effectively increasing the amount of money in circulation. This can lead to a decrease in the value of the US dollar and an increase in prices for goods and services.
- Political instability: Raising the debt ceiling can be a contentious and politically charged issue. If there is a protracted debate or disagreement over the issue, it can lead to political instability and uncertainty. This can have negative effects on the economy, as businesses and investors may become hesitant to invest in the US or make major financial decisions until the situation is resolved.
- Overall, while raising the debt ceiling may be necessary to fund the government’s operations and pay off existing debt, it can have negative economic impacts, particularly if it contributes to higher interest rates, reduced confidence in the US financial system, inflation, or political instability.
CLIP 12 JOSH HAWLE OT SEC OF INTERIOR DE HAALAND ‘WE HAVE TO MANY JOBS IN THIS COUNTRY.’ IN SUPPORT OF ESG AGENDA.
