[C Finance] Thunder continues! The US economy and credit crisis continue to highlight the sudden increase in pressure on the US public. Rating | US | Economy

On August 10th, local time, Moody's, one of the three major international rating agencies, released a report that downgraded the credit ratings of 10 small and medium-sized banks in the United States, and included 6 large US banks in the downgrade observation list. Additionally, 11 banks had a negative rating outlook.

Among them, 10 small and medium-sized banks in the United States, including manufacturers and trading banks, Webster Financial Company, and others, have had their credit ratings downgraded by one level; The credit ratings of six major US banks, including Bank of New York Mellon, Bank of America United, State Street, and Northern Trust Bank, have been included in the downgrade observation list; The outlook ratings of 11 large US banks, including First Capital Bank, Citizen Financial Group, and 53 Bank, have been downgraded to negative.

The reason for Moody's downgrade is due to deposit risk, potential economic recession, and difficulties in commercial real estate loans. Affected by this report, the three major stock markets on Wall Street experienced a comprehensive decline.

With the collapse of multiple banks, the financial hegemony of the US dollar system is crumbling.

Moody's stated in its report, "We expect that the significant increase in Federal Reserve policy rates, as well as the continued reduction in reserve requirements in the Federal Reserve banking system, and the decrease in deposits due to continued quantitative easing, will exacerbate the risk of banks' asset liability management."

Moody's also pointed out that some of the issues that triggered the banking crisis earlier this year have not yet disappeared.

In March of this year, Silicon Valley Bank and Signature Bank both collapsed, and in May, First Republic Bank collapsed again due to a broken funding chain. The consecutive "explosions" of Bank of America have triggered a crisis of trust in the US banking industry from the outside world.

Continuous "downgrade" crisis four times

The sound of "thunder" seems to have never stopped. Just a few days ago, Fitch, one of the world's three major credit rating agencies, downgraded the credit rating of the United States from AAA to AA+and issued a warning about the increasingly heavy debt burden and political dysfunction of the United States. Fitch Ratings stated that the US economy will enter a mild recession in the fourth quarter.

According to professional analysis, the consecutive downgrades by Fitch and Moody's highlight the current economic and credit crisis facing the United States.

Fitch Ratings stated that the two parties in the US Congress have serious differences on the debt ceiling issue and are willing to adopt a peripheral policy. The US government's failure to effectively address medium-term fiscal challenges has led to an increase in budget deficits and an increasing debt burden, and the fiscal situation is expected to continue to deteriorate over the next three years.

The downgrade of credit rating does not stop the soaring US government debt. According to the website of the US Treasury Department, the current US government deficit is about $1.4 trillion, while the federal government debt has exceeded $32.7 trillion, reaching a historical high, equivalent to nearly $100000 in debt per American. The US debt issue will continue to plague the world.

The debt is soaring, causing public suffering

In contrast to the high government deficit, the debt of residents is also skyrocketing.

According to Fox News, after Fitch Ratings downgraded the US credit rating, US mortgage rates soared to their highest level in nine months this week: the average interest rate on 30-year loans climbed from 6.93% last week to 7.09%, the highest level since November 2022.

Higher mortgage interest rates not only suppress consumer demand, but also place a heavy burden on individuals, families, and businesses.

The New York Federal Reserve reported on Tuesday that as summer approaches, more and more Americans are turning to using credit cards to make ends meet, with a total balance exceeding $1 trillion for the first time. This is the highest level recorded by the Federal Reserve since 2003.

Among them, the total household debt increased by about $16 billion, reaching $17.06 trillion, also setting a new record.

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In addition, a recent report by Goldman Sachs strategists stated that US companies are about to hit a "high wall" of debt, which will gradually mature in the coming years. This may trigger a new wave of layoffs, thereby shaking the US economy. Goldman Sachs estimates that the average interest rate on corporate debt may rise from its current level to 4.3% in 2024 and further to 4.5% in 2025.

Experts warn that as credit conditions tighten, American companies may face trouble. The number of corporate debt defaults in 2023 has exceeded the total number of defaults last year. Bank of America has warned that if the United States falls into a comprehensive recession, up to $1 trillion in corporate debt may face default risks.

In response, the US Consumer News and Business Channel commented, "The credit card default rate continues to rise, and there are increasing signs that consumers are feeling pain from high prices and lower savings compared to a few years ago."

Gene claimed to be an "ordinary person" from New York, and CNBC quoted an interview with him as saying, "In terms of electricity and grocery costs, inflation is driving our economy into a spiral of decline. Americans are feeling pressure every day."

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