The U.S.’s AA+ credit rating was affirmed by Standard & Poor’s, which cited the resiliency and diversity of the economy, almost three years after downgrading the nation for the first time amid political wrangling.
There is a less than one-in-three probability that the ranking will change in the next two years, the New York-based company said in a statement today. The outlook on the rating is stable.
Since the August 2011 downgrade from AAA, record budget deficits have shrunk, economic growth accelerated, the dollar rallied, stocks climbed to all-time highs and Treasuries strengthened their hold as the world’s preferred haven from turmoil. Still, S&P said a polarized policy making environment, and high general government debt and budget deficits constrain the ratings.
“The S&P report reflects that the U.S. is on better footing, that the deficit situation has been reduced over the last year and that the amount of the money the Treasury borrows has declined,” said Thomas Tucci, managing director and head of Treasury trading in New York at CIBC World Markets Corp. “Ultimately the fundamental fiscal situation in the U.S. has improved and the credit quality of the U.S. is in very good shape right now.”
The Congressional Budget Office in April projected that the federal deficit will decline to $492 billion this year, the smallest in six years, from $680 billion in 2013 and a record $1.4 trillion when President Barack Obama took office in January 2009.
Read the Full Article: Source – Bloomberg