MOODY'S: The US Government Has Less Flexibility To Deal With Another Financial Shock

Credit rating agency Moody’s is keeping its Aaa rating on the US, and the agency says its outlook remains stable.

“Numerous credit strengths keep the US government’s credit rating positioned at top-tiered Aaa, despite deterioration in its debt position since the financial crisis,” Moody’s said.

But they warn that the government needs to do something about entitlements.

“Adjustments to major social programs such as social security and health care spending may eventually become necessary to avoid pressure on US creditworthiness,” said Steven Hess of Moody’s.

Moody’s also warned about public debt levels:

Although debt levels in relation to GDP are likely to remain close to flat, they are also relatively high. After doubling from 35.1% of GDP in 2007 to 72.0% in 2013, the ratio of federal government debt to GDP is projected to peak at the end of 2014 at 74.4% and to stabilise at just below that level for the remainder of the decade.

“These high levels give the US government less flexibility to respond should it face another financial shock.”

Head to Moody’s for the whole statement.

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