California economists say S&P downgrade is no big deal
August 10th, 2011
05:48 PM ET

California economists say S&P downgrade is no big deal

Standard & Poor's recent downgrade of the U.S. credit rating AAA to AA+ has caused some concern and even panic.

But some economists in California - a state rated A- by S&P - say it's no big deal.

"A half-point drop on a single rating by a single credit service means very little," said Ann Stevens, an economics professor at the University of California at Davis.

And Stevens lives in a state with a lower S&P rating than Spain and the same rating as Botswana and Aruba.

For economist Steve Levy of the Center for the Continuing Study of the California Economy in Palo Alto, the S&P's downgrade was simply a political statement - a message of sorts to politicians.

"So in that sense, it doesn't mean anything," Levy said.

What makes sense, said Levy, is not worrying about a letter grade but worrying about the broader economy.

In California's case, S&P's A- rating has been in place since January 2010. That's one reason Californians pay the highest sales tax in the nation and the highest state income taxes in the nation on income above $46,000.

On top of that, the state is saddled with an unemployment rate of 11.8%.

But the state's treasurer says California has passed a balanced budget and made tough spending cuts, steps the state hopes will improve its credit rating.

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Filed under: Economy
soundoff (53 Responses)
  1. White Castle

    @Lyndsie Graham: What's wrong with white? Racist basturd

    August 10, 2011 at 7:16 pm | Report abuse |
  2. Abraham Lincoln Mtulu X

    Yeah.. Look how that drawer has all the dark cheap pennies segregated from all the shiny lighter coins.. Wouldn't want to taint the quarters now would we?

    August 10, 2011 at 7:18 pm | Report abuse |
  3. justathought

    If California wanted secede from the U.S. there wouldn't be any war, but there might be parties of joy.

    August 10, 2011 at 7:39 pm | Report abuse |
    • Anomic Office Drone

      That's one way to tank the American economy, and of course you would celebrate that. Just look at the Tea Party and GOP. They love hurting the economy.

      August 10, 2011 at 8:05 pm | Report abuse |
  4. FU Pavlov

    Keep it up and watch the bottom fall from beneath you.

    August 10, 2011 at 7:49 pm | Report abuse |
  5. banasy©

    @Adam:
    Yes. Yes, they are.

    @jj:
    I guess! Lol!

    August 10, 2011 at 7:50 pm | Report abuse |
  6. leeintulsa

    If california economists say it, it must be true..

    August 10, 2011 at 7:51 pm | Report abuse |
  7. Adam

    Sweet. I like a well educated and attractive girl. Of course I'd take stupid and attractive at this point. Lol

    August 10, 2011 at 8:21 pm | Report abuse |
  8. California Economist

    @lee: I concur...

    August 10, 2011 at 8:22 pm | Report abuse |
  9. Me

    Does anybody know the way out of Whatnottodoland? I'm going mad... Seriously.

    August 10, 2011 at 8:26 pm | Report abuse |
  10. banasy

    Yes, like Lyndsie Graham already said, the secession of California from the Union may just be an excellent idea whose time has come. The problem here is, is to try to sell it to a bunch of idiots who can't think their way out of a wet paper bag!!! California may just be better off on it's own or at least, it's worth talking about!

    August 10, 2011 at 8:27 pm | Report abuse |
    • Spiro T.Agnew

      Excellent point, banasy. We should discuss the pros and cons of a Californian secession from the Union, as it may very well be a very good idea. Maybe we could call a public referendum on that.

      August 10, 2011 at 8:36 pm | Report abuse |
  11. banasy©

    @Adam:
    Both of my kids are well educated and beautiful.

    August 10, 2011 at 8:30 pm | Report abuse |
  12. banasy©

    Ahhh, my troll, Dick, is here.
    Hey, Dick!

    August 10, 2011 at 8:31 pm | Report abuse |
  13. Dick¬ģ

    Very good post banasy thank you.

    August 10, 2011 at 8:40 pm | Report abuse |
  14. banasy©

    Cracking my ass up!
    Thank you!

    August 10, 2011 at 8:42 pm | Report abuse |
    • banasy

      Another Tea Partying troll trying to be funny here. Let's just get serious and talk about California's sucession from the U.S. for a change. It could just be an excellent idea whose time has indeed come! At least, just forget your Tea Party antics for once!

      August 10, 2011 at 10:23 pm | Report abuse |
  15. Adam

    @banasy: That's cool. I'm not looking to hook up via CNN blogs lol.. Just making convo.. I'm a guy.

    August 10, 2011 at 8:42 pm | Report abuse |
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