5 key thoughts on the presidential election’s impact on the US credit rating

Practice Management

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.

 

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