US in danger of losing its coveted alt145 AAAalt146 status

FPJ BureauUpdated: Sunday, June 02, 2019, 09:01 AM IST
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FPJ BUSINESS DESK Mumbai Moodyalt39s said that unless there was progress in negotiations in the coming weeks to raise the debt limit, it would put the US government rating on review for a possible downgrade.

Moodyalt39s explained th

e warning with the small but rising risk of a short- lived default. Furthermore, if the US is put on review for downgrade and progress in negotiations is not evident by mid- July, a downgrade is likely, according to Moodyalt39s.

If the debt limit is raised and default avoided, the Aaa rating will be maintained.

Were the US to lose its AAA rating, it could cause further financial damage, by increasing the cost of borrowing money, a necessary evil for a country predicted to have a $ 1.56 trillion ( £ 980bn) budget deficit this year.

However, Moodyalt39s said that the continued stable outlook will depend on the outcome of negotiations on the deficit reduction. If there is no credible agreement it said it could prompt a change to the outlook to negative.

Job woes mount

Adding to USalt146s woes, the worldalt39s largest economy generated much lower than expected number of jobs in May at 54,000 while the unemployment rate climbed to 9.1 per cent, indicating that the labour market continues to remain sluggish.

” Non- farm payroll employment changed little (+ 54,000) in May…,” the US Department of Labor said.

The employment growth last month was also the slowest since September 2010.

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