Aug. 8 - Consumers will now have to deal with the consequences of the historic downgrade of U.S. government debt, including likely higher rates on housing loans and credit cards. Bobbi Rebell reports.
PLEASE NOTE: THIS EDIT CONTAINS CONVERTED 4:3 MATERIAL The downgrade of U.S. credit by Standard & Poor's dealt a severe blow to global stock markets- but market watchers say the damage to consumer confidence and the U.S. economy has yet to be fully felt- and that could be where the real danger lies. Columbia Business School dean Glenn Hubbard: SOUNDBITE: GLENN HUBBARD, DEAN, COLUMBIA BUSINESS SCHOOL (ENGLISH) SAYING: "It's not so much the downgrade per se it's what it's saying to consumer confidence and the reminder of our need to get our fiscal house in order." And not having that in order will be costly for consumers. Hilary Kramer is the editor of GameChangerStocks.com SOUNDBITE: HILARY KRAMER, EDITOR, GAMECHANGERSTOCKS.COM (ENGLISH) SAYING; "A 30-year mortgage becomes expensive. It means that we are already on life support, with the housing market we could get a lot worse if that 30-year mortgage goes up more." And if consumers see their stock portfolio's plunging as they have for the past week and rates on their credit cards going up- any discretionary spending they were considering, could be put on the back burner: SOUNDBITE: HILARY KRAMER, EDITOR, GAMECHANGERSTOCKS.COM (ENGLISH) SAYING; "The reason we saw retailers down so much, Sears down more than 10% we saw Target fall, some of the luxury goods makers; the reason for that is that credit card and all sorts of debt could become more expensive for everyone including the stores themselves. So they could become less profitable." Add to that corporations- facing continued political uncertainty already- may now have to pay more to borrow money, increasing their operating costs. That could make them even more hesitant to create new jobs- putting even more obstacles in front of the elusive economic recovery. Bobbi Rebell, Reuters.