Experts are starting to put a dollar figure on the possible economic fallout if America loses its triple-AAA credit rating. Economists say it will cost $100 billion in additional interest payments and hurt both consumers and the economy.
Some on Wall Street say Washington will avoid default, but may not avoid the downgrade.
Tom Roth, head of Private Wealth Consulting, UBS Global Asset Management, says:
“The expectation is that the deal will be short, will be a short-term deal to get us through the next presidential election. It will ultimately not solve any of the longer-term problems that we have from a fiscal deficit perspective. And what that essentially means is that there is a likelihood, I think at this point, that we do see a downgrade of the long-term treasury rating of the United States.”
In the latest earnings update, sales at Amazon.com (Nasdaq: AMZN) surged a better-than-expected 51% last quarter, and profits, though down from a year ago, still topped forecasts, even as the company spends more to grow its digital media business.
Results out of United Parcel Service (NYSE: UPS) came in just above forecasts, but the company says Washington’s debt stalemate is hurting business sentiment.
Wrapping up the day’s economic numbers: Single family home prices in 20 metro areas were flat in May, on a seasonally adjusted basis, compared to the prior month, but still down from a year ago, according to the S&P/Case-Shiller index.
Meanwhile, the Commerce Department says new home sales fell one percent in June.
And consumer confidence ticked up this month, according to the Conference Board.
As for Wall Street – the Dow lost ground for a third day in a row with consumer stocks a big drag.
European markets finished mixed – as they did a day earlier.