S&P says U.S. faces 20-percent risk of double dip

NEW YORK Tue Jun 26, 2012 11:31am EDT

Traders stand outside the New York Stock Exchange August 8, 2011. REUTERS/Shannon Stapleton

Traders stand outside the New York Stock Exchange August 8, 2011.

Credit: Reuters/Shannon Stapleton

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NEW YORK (Reuters) - The United States faces 20-percent odds of a return to recession, rating agency Standard & Poor's said on Tuesday, although it said a slow recovery remains the company's baseline forecast for the world's biggest economy.

"But the risk of another downward leg on the recession remains real," the agency said in a statement.

While S&P said it could be underestimating American consumers, years of stagnation, as Japan has seen, could also occur.

"There are differences between Japan's situation and the current one in the U.S., but the problems are similar," said Beth Ann Bovino, a senior S&P economist, in the statement. "Our hope is that policymakers in the U.S. have learned from Japan's mistakes."

The agency cut the U.S. sovereign rating to AA-plus last year in a contentious move that drew loud protests from the government. Moody's Investors Service rates the United States Aaa, and Fitch rates the country AAA. All three ratings carry a negative outlook.

(Reporting By Luciana Lopez; Editing by Padraic Cassidy)

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Comments (6)
Ashishnfl wrote:
S&P my analysis of linear growth model shows its actually 80% chance of double dip considering unknown forces of turbulence over next 6 months.

Jun 26, 2012 12:43pm EDT  --  Report as abuse
I’ve been taking this market correction opportunity to buy US equities, particularly financial stocks. The potential rewards far outweigh the low risk of a double dip. I’m leaving about 50% of my cash in reserve to invest in crude oil contracts should the market drop out a la 2009.

Jun 26, 2012 2:29pm EDT  --  Report as abuse
Policymakers? There is no such thing. Policy is made only when legislators are tied down kicking and screaming by emergencies. There are deep problems ahead.

Jun 26, 2012 2:30pm EDT  --  Report as abuse
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