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What are the political implications of the US credit downgrade?

Photograph of the white house at sunset, with American flags lined in front of it. A person walks in front of them.

For only the second time in history, a ratings agency downgraded America’s long-term credit rating on Tuesday. Northeastern University experts greeted the news with a shrug. “It’s news that they did a downgrade, but it’s really not changing anything,” says Robert K. Triest, professor and chair of the Department of Economics at Northeastern. “It’s doubtful there would be any discernible impact on any real economic activity.”

Economics and Public Policy professor William Dickens concurred. “Politicians will make hay of it,” Dickens says. “But in terms of an economic event, my guess is you won’t see it on the bond markets, because the information is already out there that they are basing it on.”

On Tuesday, Fitch—one of the three major credit ratings firms, along with S&P Global Ratings and Moody’s—downgraded the U.S. long-term credit rating from its highest rating of AAA to AA+. It was the second such downgrade in U.S. history. In 2011, amid a debt-ceiling dispute, S&P also downgraded the U.S. from AAA to AA+, where it remains today. 

Continue reading at Northeastern Global News.

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