Tags: S&P | US | fiscal | rating | AAA

S&P: US Rating Cut Means Fiscal Room Limited

Friday, 16 Sep 2011 12:42 AM

 

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Standard & Poor's decision to strip the United States of its AAA rating suggests the country has less room to boost growth with fiscal spending, the head of the agency's sovereign ratings committee said on Thursday.

The stock market's sharp slide after the August downgrade was partly "the realization....that there will be less ability to stimulate the economy with fiscal measures going forward," said S&P's John Chambers at the Bloomberg Markets 50 Summit.

S&P has a negative outlook on the U.S. rating, which now stands at AA, with a one-in-three chance of another downgrade over the next six to 24 months.

Chambers said that did not guarantee another move and added that one would likely be triggered if the budget control act were watered down or "if the fiscal committee doesn't deliver the goods."

A bipartisan committee of lawmakers is scheduled to meet next month in an attempt to trim at least $1.2 trillion from annual U.S. budget deficits over a 10-year period.

The White House recently proposed a $447 billion job creation package, but it remains unclear how much of the plan will make it through a bitterly divided Congress.

© 2014 Thomson/Reuters. All rights reserved.

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