S&P Cautions on North American Credit Amid Global Uncertainty ... a Warning-Lite?

Standard & Poor's has issued what could be considered yet another warning-lite for North American credit ratings as the chances of a U.S. recession have risen. S&P warned that the odds of a true double-dip downturn in the eurozone remain high. The belief is that the U.S. and European economies will not improve substantially in the next year, and that is even under S&P's base-case scenarios.

S&P noted that the global weakening comes with considerable downside risks and it expects more challenging credit conditions ahead. The culmination of the coming "fiscal cliff" in the United States and the European debt contagion are all meeting the risks of a hard landing in China at the end of 2012 or the start of 2013.

S&P even notes that the mix of these conditions could lift the unemployment rate in Canada and constrain the income of Canada's workforce. Canadian consumer debt servicing and a Canadian housing market correction could occur as well, although S&P's base-case is that Canada will see a soft landing.

Keep in mind that this a part of a larger S&P report and is not a formal ratings call.

JON C. OGG

Filed under: 24/7 Wall St. Wire, Analyst Calls, Economy, International Markets