Credit Downgrade Won’t Hurt Consumers, the... - Other News

ADVERTISING DISCLOSURE

ADVERTISING DISCLOSURE:
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » News » Other » Credit Downgrade Won’t Hurt Consumers, the Downer is Still the Economy

Credit Downgrade Won’t Hurt Consumers, the Downer is Still the Economy

Credit Downgrade Won’t Hurt Consumers, the Downer is Still the Economy

For the first time in history, Standard & Poor’s, an American-based financial services company, downgraded the credit rating of the United States government from their long-held top-tier rank to AA+. The remaining two of the Big Three credit ratings companies, Moody’s Investor Services and Fitch Ratings, both opted to uphold the country’s AAA rating for the time being.

According to many economists, it’s not really the downgrade in and of itself that will affect the U. S. economy, but the behavior of frightened consumers, as a result of the downgrade, that will have the biggest impact.

Cheryl Cost , the managing director of AFW Wealth Advisors, said in an article on Boston.com that, by themselves, the S&P downgrades will not cause the economy to recede. But fear-gripped investors and consumers reacting based on emotions and not logic to the recent economic bad news may very well incite a downward spiral.

America seems to be teetering on the brink of a “double-dip” recession, a term used to describe when an economy slides into reverse after experiencing a fleeting recovery.

“The S&P downgrades should have been non-events,” Costa said. “But what we saw in [Monday’s] stock drop is an overreaction. Fear and panic have a way of feeding on themselves, and that’s what’s going on here. If people start yanking their money out of the stock market, and hoarding money rather than spending because they are now gripped by fear, that could bring on a downturn.”

In actuality, July’s 9.1% unemployment rate showed a slight improvement, according to U.S. Bureau of Labor Statistics.

“The downgrades are having an emotional impact, a visceral one, but it’s unlikely to have the kind of impact that calls for dramatic action on the part of the average consumer,” Daniel J. Galli told Boston.com.
The principal at the Norwell-based financial planning firm, Daniel J. Galli & Associates, Galli also went on to say “the S&P downgrade will not change the fact that the US is still the safest place for a large institutional investor to put money.”

In spite of the current free-fall in the stock market, the impact of the AAA to AA+ downgrade will, most likely, not be felt by consumers for at least several months. Credit card interest rates follow the prime rate and the Federal Reserve has given no indication that consumers should brace themselves for those for any change in that area in the near future.

“Long-term, the downgrade is going to mean inflation,” said the president of Cabot Money Management of Salem Rob Lutts to Boston.com.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:

Related News:

The Appliances Connection Credit Card Is Coming

Posted: May 25, 2018

Alliance Data Systems Corporation has inked a new deal with Appliances Connection, paving the way for a new co-branded credit card and loyalty program for the online retailer. The new card will provide consumers with a way to finance their ... Continue reading
Chases New Ink Business Unlimited Card

Posted: May 24, 2018

With some help from Pro Skateboarder Tony Hawk, Chase is rolling out the new Ink Business Unlimited card, offering cardholders 1.5% cash back on all purchases with no categories to deal with. On top of earning cash back, they also get a ... Continue reading
New IKEA Credit Card

Posted: May 23, 2018

The IKEA Visa credit card is now available, offering 5% back in rewards on IKEA purchases. People with this card also earn 3% back when shopping for groceries, eating out and paying for utilities. All other purchases get 1% back. Continue reading
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs up to the quarterly maximum each time you activate.
For Excellent, Good Credit
We'll match all the Miles you've earned at the end of your first year. For example, if you earn 30,000 Miles, you get 60,000 Miles.
For Excellent, Good Credit
0% Intro APR on Balance Transfers and Purchases for 18 months. After that, the variable APR will be 15.49% - 25.49% based on your creditworthiness*
For Excellent, Good Credit
You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!