Dow falls more than 600 points

President Barack Obama

Plunging stock prices in the wake of Standard & Poor’s decision to strip the United States’ top-tier AAA credit rating may threaten consumer confidence and could push the frail economy into recession.
While analysts say the direct impact on the economy from the credit rating downgrade itself is limited, a sustained drop in share prices would have a negative impact on wealth — and likely force both consumers and businesses to hunker down.

Consumer spending accounts for about 70 percent of U.S. economic activity and analysts at Albion Financial Group estimate the domestic stock market has dropped by about 14 percent since July 25, wiping off $1.93 trillion.

“This massive move in the equity market does dim the economic outlook for the next six months,” said Carl Riccadonna, senior U.S. economist at Deutsche Bank in New York. “We would put the recession odds at about 40 percent, and about two weeks ago they were at about a 10 percent chance.”

U.S. and global shares have come under relentless selling pressure since late July as investors took a dim view of a nasty fight in Washington over raising the country’s debt ceiling and a string of weak economic data around the world.

Adding to the stock market’s woes, S&P on Friday cut the long-term U.S. credit rating by one notch to AA-plus on concerns about the government’s budget deficit and rising debt burden. Stocks on Wall Street tumbled more than 5.0 percent on Monday, their worst day since December 2008 during the worst of the banking crisis.

Obama: We’re still an AAA country

President Barack Obama yesterday blamed a downgrade in the United States’ credit rating on political gridlock in Washington and said he would offer some recommendations on how to reduce federal deficits.

Obama stopped short of sharp criticism of Standard & Poor’s for its downgrade of U.S. debt to AA-plus from AAA on Friday. Senior administration officials have accused S&P of going ahead with the downgrade despite a $2 trillion mathematical error.

“Markets will rise and fall, but this is the United States of America. No matter what some agency may say, we have always been and always will be a triple-A country,” Obama said.

Obama said in a White House appearance that he hopes S&P’s downgrade of U.S. debt will give U.S. lawmakers a new sense of urgency to tackle long-term deficit spending and said he did not believe the reductions could be carried out with spending cuts alone.


News
Entertainment
Sports
Lifestyle
Local

'Five Star': A coming-of-age story about Brooklyn's gang…

'Five Star' tells a coming-of-age story about Brooklyn's gang culture at the Tribeca Film Festival.

National

New statue of Penn State's Paterno set for…

By David DeKokHARRISBURG, Pennsylvania (Reuters) - Fundraising for a new statue depicting Joe Paterno "as the man he was and not Joe the football coach"…

Local

NYPD detective shoots partner: DA

A New York City Police detective was arrested early Thursday and charged with driving under the influence while on the clock.

Local

Judge strikes down NY limits on donations to…

A federal judge on Thursday reluctantly struck down New York's limits on donations to independent political action committees as unconstitutional, potentially ushering in a new…

Music

M.I.A. talks 'Matangi,' divinity, spontaneity and holograms

"There’s pressure for me to become a theatrical production like 'Glee,' or something" says M.I.A., "It’s like, 'the pressure’s on, bitches.'"

Movies

Tribeca: 'Goodbye to All That' star Paul Schneider…

Paul Schneider talks about his new film "Goodbye to All That," not acting too much and how he'd rather indulge in simple pleasures than play the scene.

The Word

Taylor Swift battles paparazzi daily at Tribeca penthouse

We're entranced by these photos of poor Taylor Swift leaving her Tribeca apartment.

Movies

'A Brony Tale' documents men who are into…

Ashleigh Ball, a voice actress on "My Little Pony," speaks to us.

NHL

Rangers unlikely to change lineup, Steve Mason in…

Rangers head coach Alain Vigneault wouldn't say much, but don't expect any lineup changes.

NBA

Jason Collins named to Time's 100 Most Influential…

Jason Collins was named to the list after coming out as the first openly gay player to appear in an NBA game.

NBA

Nets excited for Brooklyn fans to bring the…

Kevin Garnett has definitely used profanity while trash talking or in practices, but never to describe an entire borough.

NHL

Rangers turn up shot blocking in Game 3…

Game 3 of the Rangers-Flyers opneing round series was not a return to John Tortorella hockey.

Parenting

New study: Inside the wage gap between boys…

According to a new study, there's a wage gap between boys and girls, with boys earning more allowance for less chores.

Tech

From Apple TV to Fire TV, big changes…

Apple is set to launch a new generation of it's Apple TV, which grossed over $1 billion in 2013. But competition from Amazon and Google looms.

Style

Katy Perry releases a new Claire’s collection

Katy Perry expands her empire by releasing an accessories collection at Claire's.

Style

MAC & Proenza Schouler collection unveiled

MAC Cosmetics is releasing a new collection with Proenza Schouler.