UCF Economist: U.S. Debt Downgrade is a ‘Warning Shot’

Fitch’s downgrade of the U.S. debt late yesterday is troubling, says University of Central Florida economist Sean Snaith.

“This is a warning shot across the U.S. government’s bow that it needs to right its fiscal ship,” said Snaith, the director of UCF’s Institute for Economic Forecasting. “You can’t just spend trillions of dollars more than you have in revenue every year and expect no ill consequences.”

“U.S. government debt has long been the yard stick against which other bonds are measured in terms of default risk,” he said. “A downgrade acknowledges that the fiscal situation in the United States, once the crown jewel of default-risk-free debt, is not a permanent thing.

“I don’t know how long we can ignore it until it becomes a major problem.”

Sean Snaith, Ph.D., is the director of UCF’s Institute for Economic Forecasting and a nationally recognized economist in the field of economics, forecasting, analysis and market sizing. He has been recognized by Bloomberg News as one of the country’s most accurate economic forecasters and has served as a consultant for both local governments and multi-national corporations. Before joining UCF’s College of Business, Snaith held faculty positions at Pennsylvania State University, American University in Cairo, the University of North Dakota and the University of the Pacific. More of Snaith’s work is available at http://iec.ucf.edu or you can follow him @SeanSnaith.