Late Friday, S&P lowered its long-term credit rating on the U.S. to AA+ from AAA. The move was not entirely unexpected as Congress' recent debt ceiling compromise fell short of the rating agency's goal for more significant deficit reduction. However, this is a big news event since the downgrade marks the first time the U.S. has lost its AAA status since its initial publication 70 years ago. In addition, S&P put a negative outlook on the rating, which means that further downgrades are possible. So, it's likely the media will have some dramatic coverage.

Emerging Markets Driving Global Growth

There is no question that emerging and developing markets, such as China and India, are expected to experience faster growth than the U.S. going forward. According to the International Monetary Fund, as the chart on the right shows, growth in emerging and developing markets is expected to significantly outpace growth in the U.S. As a result, the contribution to gross world output (a statistic similar to gross domestic product [GDP] that focuses on global production) from emerging and developing economies is expected to increase to 39% from its current level of 31% over the coming years.