How Does the United States Standard and Poor's Credit Rating Affect You?
United States
In May of 2011, Standard and Poor's Rating Services, which is one of the two largest United States financial services companies; downgraded the nation's outlook for the economy from "stable" to "negative" with the possibility that its current triple A credit rating could be lowered during the next two years.
Basically, Standard and Poor's dismal outlook was due to the national deficit in spite of what it referred to as a "highly diversified, high income and flexible economy."
But, you might be wondering how this lowered credit rating for the U.S. affects you, personally. The fact is that it would affect all United States citizens. None of us will be untouched by a poor credit rating for the country.
Why?
Here are some consumer areas that a lowered credit rating for the U.S. would impact:
- According to policy makers and various economic experts, home mortgage rates would rise simply because it would cost the United States government and businesses more to borrow money. If it costs them more, then it stands to reason that it will cost you more, too. Those higher costs of borrowing money will be, by necessity, passed on to the consumer.
- Many economists also fear that a lower credit rating for the country would slow or completely wreck a national economic recovery due to a tightened credit market. Most expert financial experts agree that if the U.S. credit rating is lowered as Standard and Poor predict as a possibility within the next two years, it won't be a question of "if" the cost of issuing debt will increase but instead, a question of how much it will increase.
So, do these things affect you? Sure, they do, in one way or another. The national economy depends on credit flowing freely and at reasonable interest rates. This has already cost thousands upon thousands of workers their jobs and paychecks as businesses floundered and went under, unable to borrow to expand or even stay in operation.
If the economic recovery of the United States gets derailed as predicted, more businesses will fail with people losing jobs, a lot of homeowners will have their mortgage payments raised due to higher interest rates, and many will find themselves in straitened financial circumstances.
What would you do if you found yourself a member of these groups of Americans who may be out of work or facing mammoth mortgage payments?
Hopefully, it won't happen. But, with such dire predictions for the national economy in the forecast, it wouldn't hurt a thing to adopt the Boy Scout motto of "Be Prepared."
How can you prepare for such an eventuality? Take a few minutes to look into starting a home business!
Based on statistics from the 2010 United States Census, there are approximately 38 million home based businesses in the nation.
Home business start-ups have risen drastically during the past few years of the national economic recession. People who have found themselves out of work and/or facing higher mortgage payments along with cost of living increases from the gas pump to the grocery store turned to a home business as a way to earn a living.
In a perfect world, Standard and Poor's gloomy outlook on the economic health of the nation will be proven wrong. But, this may be a case of an ounce of prevention being worth a pound of cure.
So, check into starting a home business today and be prepared for whatever comes!
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