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
The content is accurate at the time of publication and is subject to change.

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:

New Priority Pass Restaurants in Los Angles and Salt Lake City

Posted: September 24, 2018

Travelers passing through Los Angeles International Airport (LAX) and Salt Lake City International Airport (SLC) now have two more restaurants to check out if they are Priority Pass members - Il Viaggio at SLC and P.F. Chang's at LAX. Continue reading
6.2 Billion Settles the Visa MasterCard Swipe Fee Class Action Lawsuit

Posted: September 21, 2018

Visa and MasterCard will be paying out $6.2 billion to settle a lawsuit brought by 12 million merchants located across the United States. In the case, the defendants claimed that both MasterCard and Visa inflated swipe fees so that the ... Continue reading
Brand New Categories for Chase Freedom Cardholders

Posted: September 20, 2018

Chase Freedom Cardholders have new categories to choose from this fall and just in time for the holiday season too. They will be able to earn 5% cash back when shopping at Wholesale Clubs, like Sam's Club and Costco, as well as Department ... 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
INTRO OFFER: Discover will match ALL the Miles you've earned at the end of your first year, automatically. For example, if you earn 30,000 Miles, you get 60,000 Miles. That's $600 towards travel!
For Excellent, Good Credit
0% Intro APR on Balance Transfers and Purchases for 18 months. After that, the variable APR will be 15.74% - 25.74% 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!