Comment on Slow economy is a worse problem than any downgrade

Slow economy is a worse problem than any downgrade

The real risk to holders of U.S. debt is not the government's heavy reliance on borrowing or the deep political divisions in Washington. It's the weakening U.S. economy. Until very recently, most forecasters were expecting the pace of economic growth to pick up in the second half of the year. But despite a surprisingly strong showing from the job market in July, a string of disappointing data has prompted many economists to slash their growth targets. “Whatever (economic) growth you thought you were going to get as of a month ago, it is quite reasonable to expect less as of today,” Credit Suisse chief econmist Neil Soss said in a weekend conference call with repoters and investors. The central issue behind the Standard and Poor's decision late Friday to downgrade the government's AAA credit rating was the level of government debt, relative to the size of the U.S.

 

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