Videos | August 11, 2011

August economic update 2011

ING Commercial Banking economists explain the downgrade of US sovereign debt and its implications.

The big economic news that emerged at the start of this month was the downgrade of United States Sovereign debt by credit rating agency S&P. ING Commercial Banking chief international economist Rob Carnell explains in the August economic update video that the downgrade comes against the backdrop of a $2.1 trillion deficit reducing agreement, due to take place over the next decade. But, says Carnell, the agreement fell “well short of the $4 trillion ‘Grand Bargain’ that S&P had suggested would be necessary to stabilise the US debt to GDP ratio”.

He discusses the implications for the US and elsewhere – and explains why ING economists cut their US growth forecasts for 2011. “The historic decision was the first of its kind for the US and has ended up having a spill over effect for other nations, raising doubts about their own credit ratings.”