“Standard & Poor’s reduced its estimate for next year’s U.S. economic growth to 2.6 percent from the 3.1 percent growth it expected last quarter.
The credit ratings agency said in a report that “significant downside risks” from government spending cuts sparked the change, CNBC reports.
“We’ve lowered our forecast for U.S. GDP growth in light of the additional sequester [automatic] spending cuts in 2014 as well as the potential for another political standoff in Washington after the October government shutdown,” S&P explains.
To be sure, Democrats and Republicans in Congress struck a deal Tuesday that reduced some of the automatic spending cuts slated for fiscal 2014, which began Sept. 30.
The deal calls for a discretionary budget of $1.012 trillion for the year, compared to the $967 billion amount originally slated under sequestration.
The bipartisan accord does increase deficit reduction by $23 billion with the extension of a Medicare spending cut.
S&P also cites the Federal Reserve as a wild card….”
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