Last week, the Congressional Budget Office said it expects this year’s federal deficit to amount to $642bln. This would be about $200bln less than in 2012 and represent a reduction from 7% of the GDP to just 4% of the GDP. The deficit would be at its lowest in 5 years.
On Monday, Moody’s – which together with Fitch still keeps the US at the top of its rating scale – welcomed the Office’s forecasts as inspiring hope. On Tuesday, however, Moody’s Vice President Stephen Hess warned the US of a downgrade in the event it fails to sort out its debt and deficit problems.
We have an opinion from Dr Geldy Soyunov, a senior analyst of Russia’s Alpha Bank:
"I believe Moody’s is urging the congressional Democrats and the congressional Republicans to waste no time in finding a solution to their country’s fiscal mess."
Analyst of the Moscow-based Kapital company Dr Konstantin Gulev explains the nature of the disagreements between the two major American parties:
"The Democrats would reduce the deficit by raising taxes, and the Republicans, by slashing expenditure. Unless these conflicting approaches are somehow reconciled, the US will have its Moody’s rating revised downwards."
Moody’s expects the US economy to expand by 2% in 2013, creating 2mln jobs. The year 2012 brought a similar number of new working positions.