A Standard & Poor's official said on Sunday there is a 1 in 3 chance that the US credit rating could be downgraded another notch if conditions erode over the next six to 24 months.
The credit rating agency's managing director, John Chambers, told ABC's 'This Week' that if the fiscal position of the US deteriorates further, or if political gridlock tightens even more, a further downgrade is possible.
Chambers also said that it would take ‘stabilization and eventual decline’ of the federal debt as a share of the economy as well as more consensus in Washington for the US to win back a top rating. S&P downgraded the US rating on Friday, from AAA to AA+, for the first time.
Meanwhile, former Federal Reserve Chairman Alan Greenspan said he expects the stock market slide to continue in the wake of a decision by S&P to downgrade the US credit rating. Appearing Sunday on NBC's ‘Meet the Press,’ Greenspan said markets will take time to bottom out and that he expects a negative reaction on Monday to the S&P action.
But Greenspan also said he doesn't see any risk in investing in the United States and says that S&P's downgrade won't change that. The former Fed chairman said the downgrade ‘hit a nerve’ and is damaging to the psyche of the country.
But he said he can't foresee a scenario in which the US will default on its debts.