Two out of three ain’t bad, but that record among the bond-rating agencies hasn’t done anything for the economy.
Given that Standard & Poor’s had downgraded the U.S. credit rating for the first time, provoking much hand-wringing, it’s worth noting that Fitch Ratings and Moody’s continue to hold the U.S. credit rating at the highest “AAA” grade.
Moody’s did say its outlook is negative, because of soaring U.S. deficits during the recession that began with a market crash in 2008.
All the rating agencies have been assailed for giving good ratings to the lame ducks that fell in the Crash of 2008, including Lehman Brothers and the AIG insurance company. And despite the S&P downgrade, investors are still buying Treasury notes at a solid clip.
Still, there are obvious concerns about the nation’s ability to get out of debt. That will require both spending cuts and some tax increases, or at least the suspension or repeal of some high-dollar tax exemptions.
Given the dysfunction in our political system, and voters’ unwillingness to sacrifice today’s benefits for future generations, maybe S&P is more right than not. But Fitch noted that the United States has a “flexible, diversified and wealthy economy.”
We hope we can keep it that way.