US govt shutdown would be negative for credit rating, says Moody's

Ratings agency Moody's said on Monday a U.S. government shutdown would be "credit negative" as it would highlight the weakness of U.S. institutional and governance strength compared to other top-rated governments, even though its economic impact will likely be short-lived.

U.S. government services would be disrupted and hundreds of thousands of federal workers furloughed without pay if Congress fails to provide funding for the fiscal year starting Oct. 1.
 

The publication of major U.S. economic data of critical importance to policymakers and investors will also be suspended indefinitely should the federal government shut down.
 

"A shutdown would be credit negative for the US sovereign," Moody's, which has a triple-A rating for the U.S. government, said in a statement.
 

"In particular, it would demonstrate the significant constraints that intensifying political polarization put on fiscal policymaking at a time of declining fiscal strength, driven by widening fiscal deficits and deteriorating debt affordability," it said.