Obama has said a rating cut may hurt the broader economy byincreasing consumer borrowing costs tied to Treasury rates. Anincrease in Treasury yields of 50 basis points would reduce U.S.economic growth by about 0.4 percentage points, JPMorgan said ina report, citing Fed research and data.
“The minute you start downgrading away from AAA, you takesmall steps toward credit risk and that is something any countrywould like to avoid,” Mohamed El-Erian, chief executive and co-chief investment officer at Pacific Investment Management Co.,said in a Bloomberg Television interview.