October 25, 2009
The United States my lose its AAA-rating if it can not control its deficit hike, rating agency Moody's Investors Service warned on Thursday.
Steven Hess, Moody's lead analyst for the United States, said in a TV interview that the AAA rating of the United States is "not guaranteed." He said if the U.S. deficit does not drop to a sustainable level in the next three to four years, the U.S. rating will be "in jeopardy."
The U.S. government posted a record deficit of 1.417 trillion U.S. dollars in the fiscal year ended Sept. 30. Stimulus package to combat the severe recession and a series of bailout rescues to banks and automakers have put a heavy burden on government spending.
The Obama administration has predicted that deficits would top 1 trillion dollars through fiscal year 2011.
Currently Moody's has a stable outlook on the U.S. rating, an indication that there will not be a change in the next 18 months.
Also on Thursday, Moody's said European countries' rising debt won't trigger across-the-board credit-rating downgrades as countries are measured relative to each other. Earlier this year, Standard & Poor's lowered its outlook on Britain from stable to negative, causing unrest in global equity markets.