And Now What?

As the U.S. loses its top-notch credit rating, consumers face rising interest rates and borrowing costs that may cost taxpayers billions of dollars. Analysts warn the Standard & Poor’s downgrade would increase the costs on everything from student loans to car payments. The downgrade could also spread to a state and local level, pushing up the costs of borrowing funds for schools, roads and parks.

S&P cut the long-term U.S. credit rating from AAA to AA+ Friday night on concerns about the government’s budget deficits and rising debt burden. President Barack Obama signed legislation on Tuesday designed to reduce the fiscal deficit by $2.1trillion over 10 years. But that was well short of the $4 trillion in savings S&P had called for as a good ‘down payment’ on fixing America’s finances.

The political gridlock and the failure to seriously address U.S. long-term fiscal problems came against the backdrop of slowing economic growth. It also led to the worst week in the U.S. stock market for two years. The S&P 500 stock index fell 10.8 per cent in the past 10 trading days on concerns that the U.S. economy may head into another recession. There are also fears the European debt crisis has been growing worse as it spreads to Italy.

http://investmentwatchblog.com/warning-consumers-face-soaring-cost-of-living-as-downgrade-of-u-s-credit-rating-threatens-to-push-up-interest-rates/