Moody's Says U.S. Credit Outlook Is Stable For Now

Despite recent worries, following last week's Negative outlook on the UK, rating, Moody's is out today saying the US Government's Aaa sovereign rating is "stable" despite the increased debt burden.

Moody's cited the diverse and resilient U.S. economy, strong government institutions, high per capita income, and a central position in the global economy. Moody's Vice President Steven Hess said, "Moody's expects that, because of these factors, US economic strength will emerge after the crisis without major impairment. The global role of the US currency also contributes to the ability of the economy and government finances to rebound."

Moody's also notes the U.S. balance sheet flexibility is still high. They also said a higher rate of US population growth through 2025 relative to other advanced economies will also contribute to continued economic growth -- and government revenues.

While the firm's outlook for the U.S. is stable, they warn that a reassessment of the long-term growth prospects of the economy and the ability of the government to return to a sustainable debt trajectory could put negative pressure on the rating in the future. Hess said, "How the economy and fiscal policy fare after the recession will be key."

Last week, rival rating agency S&P moved the U.K.'s sovereign rating outlook to "Negative", citing a debt burden that could approach 100% of GDP. The news sent shock-waves through the markets leading PIMCO's Bill Gross to warn that the U.S. too could lose its AAA-rating.

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