Moody's says U.S. states outlook negative for 6th year

NEW YORK Thu Feb 14, 2013 10:59am EST

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NEW YORK Feb 14 (Reuters) - Moody's Investor Service said on Thursday that its outlook for the U.S. states sector remains negative for the sixth year in a row despite signs of stabilization of the economy.

"Expenditure pressure from budget drivers such as Medicaid and pensions has not abated, and the continued threat of federal deficit reduction actions presents a risk to economic growth," the rating agency said in a report.

Moody's, whose median state rating is Aa1, said that default risk for the sector remains "very low".

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