This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Moody's Reaffirms Triple-A Rating for U.S.

NEW YORK ( TheStreet) -- Moody's Investors Service confirmed its Triple-A rating on the U.S. government's debt late Tuesday after legislation to lift the debt limit and reduce the deficit finally secured passage earlier in the day.

But the credit ratings agency said its outlook is now negative on the United States, saying a downgrade would be in order if the federal government's fiscal discipline weakens in 2012; if additional "fiscal consolidation measures" aren't adopted in 2013; if the economic outlook worsens significantly; or if the government's funding costs rise well beyond current expectations.

"In confirming the Aaa rating, Moody's also recognized that today's agreement is a first step toward achieving the long-term fiscal consolidation needed to maintain the US government debt metrics within Aaa parameters over the long run," the agency said in its press release.

Moody's noted that the political rift illustrated by the tense negotiations for a deal to boost the debt ceiling could be a problem for the country going forward if the Democrats and Republicans prove unable to work together to continue fiscal reform. The agency sees a stabilization of the federal government's debt-to-GDP ratio "not too far above its projected 2012 level of 73%" by the middle of the decade as necessary, and voiced concern that Capitol Hill may be too dysfunctional to make this happen.

"Wide political differences that have characterized the recent debt and fiscal debate, if they continue, could prevent effective policymaking around that time," the firm said. "Measures that further reduce long-term deficits would be positive for the rating; a lack of such measures would be negative."

An increase in interest rates is also a potential roadblock.

"While Moody's and economic forecasters generally expect interest rates to rise over the next few years, a rise in borrowing costs above and beyond what is now expected would threaten efforts at fiscal consolidation," the firm said.

Stocks were slammed on Tuesday as the Dow Jones Industrial Average dropped nearly 300 points and the S&P 500 turned negative for the year with new fears about the fragile economic recovery coming to the forefront.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $110.72 -0.53%
FB $92.40 -0.43%
GOOG $642.24 -0.50%
TSLA $231.83 -4.00%
YHOO $31.88 3.00%


Chart of I:DJI
DOW 16,912.29 +122.10 0.73%
S&P 500 1,995.82 +15.90 0.80%
NASDAQ 4,791.1520 +42.7910 0.90%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs