Fannie and Freddie help brighten America's credit outlook
Nearly two years ago, Standard & Poor's downgraded the U.S. credit rating from triple-A late Friday to double-A-plus — with a negative outlook.
Thanks in part to strong profits from Fannie Mae and Freddie Mac, S&P reports the outlook on the long-term rating is revised to stable from negative.
This development — proof of a stronger housing economy — combined with tax hikes and expenditure cuts are the primary drivers for the S&P decision.
"We believe the U.S. economic performance will match or exceed its peers’ in the coming years," said a release from S&P.
The credit ratings agency said it took into account reports from the Congressional Budget Office when factoring Fannie and Freddie performance into the outlook revision.
"And adding non-deficit contributions to government borrowing requirements (such as student loans) leads us to expect the U.S. general government deficit plus non-deficit borrowing requirements to fall to about 6% of GDP this year (down from 7%, in 2012) and to just less than 4% in 2015," said the S&P.
"We now see net general government debt as a share of GDP staying broadly stable for the next few years at around 84%, which, if it occurs, would allow policymakers some additional time to take steps to address pent-up age-related spending pressures," the analysts conclude.