Will the outcome of the U.S. presidential election affect the country’s stable AAA credit rating and outlook? Moody’s says no, according to a forexlive report.
Here are five key notes:
1. The credit rating is high, reflecting economic and institutional strength as well as strong debt affordability. The country has a low susceptibility to event risk.
2. The U.S. dollar is a global reserve currency, which is one of the credit strengths regardless of policy shifts or government changes, according to the report.
3. Spending on non-discretionary social programs could weaken the country’s credit profile if they cause the federal deficit to widen as projected. These choices during the next presidency could make a difference in the medium-term:
• Fiscal policy
• Entitlement spending
4. Neither Democratic nominee Hillary Clinton nor Republican nominee Donald Trump have solidified their policies; Ms. Clinton has some revenue-based reforms to “narrow the long-term shortfall in Social Security financing” but Mr. Trump hasn’t addressed these issues.
5. The policies that could have an affect on the United States would be:
• Spending on infrastructure, if the spending was funded with new revenue sources or reallocation
• Tax reform
• Healthcare reforms
According to the report, policy issues like immigration and trade impact the country’s credit rating less.