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S&P Downgrades US Credit Rating for First Time

Credit rating agency Standard & Poor's says it has downgraded the United States' credit rating for the first time in the history of the ratings because the deficit-reduction plan doesn't do enough to stabilize debt, and this photo shows the US Capitol jus

The credit rating agency Standard & Poor's has downgraded the U.S. credit rating for the first time ever from the country's elite AAA status to AA-plus, with a "negative outlook."

In a statement late Friday, S&P said it made the move because the deficit-reduction plan passed by Congress on Tuesday did not go far enough to stabilize the country's debt situation.

S&P also said the downgrade reflects the agency's view that the "effectiveness, stability and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges."

Media reports citing White House officials say S&P miscalculated its projections on the U.S. debt plan by about $2 trillion.

U.S. President Barack Obama and Congress reached a deal a few hours before the deadline on Tuesday to increase the nation's $14.3 borrowing limit and avoid an unprecedented default on the government's financial obligations.

The other two major credit rating agencies, Moody's and Fitch, so far have not downgraded the U.S. credit rating.

The downgrade comes on the same day the U.S. government announced a net gain of 117,000 jobs in July, and a slight decline in the unemployment rate to 9.1 percent. Friday's report from the Labor Department was better than economists had predicted.

The data also show the unemployment rate declined because some unemployed people gave up their job hunt in the belief that there is no work available for them. Washington does not count people as unemployed unless they are actively seeking jobs.

The president welcomed the job gains, but said the country must do better. Obama said the economy will improve, and pledged to press Congress for legislation to create jobs when lawmakers return to Washington next month.

The U.S. is the world's largest economy, but investors have voiced little confidence in the country's sluggish recovery, even with the agreement on the debt ceiling plan.

Some information for this report was provided by AP and AFP.