US debt downgraded to 'negative'

Credit ratings agency Standard and Poor’s has downgraded its outlook for the US to negative on fears country may not be able to address long-term debt issues.

STANDARD & POOR’S RATINGS Service has lowered its long-term outlook for the United States’ sovereign debt from “Stable” to “Negative” due to risks from the country’s growing deficit.

But the agency also reaffirmed the investment-grade credit ratings on the country’s long-term and short-term debt.

S&P says the US has a high-income, diversified and flexible economy that has helped it to encourage growth while containing inflation, but added that the country’s ballooning deficit could offset those positives over the next two years.

The agency noted that the deficit grew to 11 per cent of gross domestic income in 2009 – much higher than the average of 2 per cent to 5 per cent in the previous six years.

- AP

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