WASHINGTON - The Fitch Ratings credit-ranking company is warning it may lower the United States’ credit rating if U.S. lawmakers fail to agree on a plan to reduce the country’s ballooning budget deficit next year.
The credit agency said Monday the U.S. will keep it’s top-tier AAA credit rating for now. But the company lowered the outlook on the credit rating from “stable” to “negative,” saying it is losing confidence the government will take the necessary steps to lower the deficit.
Last week, a bipartisan committee of congressman announced it had not been able to reach an agreement on cutting $1.2 trillion over the next ten years. The failure triggers massive automatic cuts to defense and domestic programs beginning in January 2013.
The other two major ratings agencies left their ratings unchanged in the wake of the committee’s failure. But in August, Standard & Poor’s downgraded the U.S. from AAA to AA+, with a “negative” outlook, while Moody’s is also threatening to lower the U.S. from it’s AAA rating if budget cuts are not made.
Despite the negative economic news, U.S. consumers were expected to set a new record for on-line sales Monday as retailers offer deep discounts to lure shoppers buying things for Christmas gift-giving in late December.
Experts and investors watch retail sales closely because consumer demand drives about 70 percent of U.S. economic activity. The U.S. economy is the world’s largest, and is a key market for many exporters around the world.
Two groups that track on-line sales predict they will set a record on what has become known as “Cyber Monday” when shoppers return to work after a the long Thanksgiving holiday weekend. The National Retail Federation predicts that 122 million Americans will shop on-line Monday, including many who use their computers at work for this purpose.
The prediction of strong on-line sales follows Friday’s record-high sales figures from traditional stores. Analysts at ShopperTrak say sales on the day known as “Black Friday” jumped 6.6 percent from the same day a year ago, and represented $11.4 billion in retail purchases.
Merchants call the day after the U.S. religious and patriotic holiday of Thanksgiving “Black Friday.” For many stores, it is the day when they change from loss to profit for the year. The name comes from the tradition of recording losses in red ink, and writing profits in black.
U.S. retail sales have been hurt by the economic crisis, high unemployment, and worries about the economic future. Many merchants say deep discounts and heavy advertising have apparently persuaded cautious consumers to spend money.
But some analysts warn that sales could decline once the “Black Friday” and “Cyber Monday” promotions end.
Source: VOA News