As you might be fully aware by now, United States of America has, for the first time in history, lost it’s AAA rating. US has held this rating since 1917. Standard and Poor (S&P) reduced US’s rating from AAA to AA+. This move was made by S&P due to concerns about US’s growing budget deficit.

Now a common man like you might wonder what this has to do with you. How will your lives be affected? Basically, this rating is meant for investors who want to invest their money in US. AA+ rating means that they need to do some thinking before investing in US. This rating downgrade affects the investors’ confidence in the US economy. Lets not forget that these investors are the ones who fuel the market.

For a common man like you and me, this downgrade will impact us by making loans and mortgages more expensive. Wanted to get that new house? Forget about it. Due to this, people stop spending more and start saving (which is a good thing for you personally because you should always be saving for bad times) but that hurts the economy and it starts to shrink. If the economy continues to shrink that it may lead to depression which means job cuts.

In fact, a lot of experts are currently discussing whether US is heading for another recession. US had started to make recoveries from the 2008 recession but recent debt issues have brought up the issue once again.