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Latino Daily News

Saturday August 6, 2011

5 Easy to Understand Effects of a Credit Downgrade

5 Easy to Understand Effects of a Credit Downgrade

Photo: Standard and Poors

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Standard and Poors have downgraded the US Credit Rating to AA+.  What does this mean? Here are five effects of the action:

1.) The interest rate the government pays to finance the growing national debt will increase.
2.) The interest you and your employer pay will go up. (Some examples are mortgages, student loans and credit cards)
3.) This increasing of costs for consumers and businesses will slow the economic recovery.
4.) As the economy slows, the stock market will react. Investors buy stocks to share in growing company’s profits. Some experts expect the Dow may fall another 1100 points.
5.) Slow economic growth means less jobs.