How a U.S. Debt Downgrade May Affect Consumers

By TARA SIEGEL BERNARD
NYT

This is not yet one of those stuff-your-money-in-a-mattress moments.

Still, the talk in Washington of a federal budget crisis and possible default has given rise to all sorts of consumer fears of doomsday scenarios. Missed Social Security payments. Spikes in interest rates. Draconian cuts in government services.

But the most likely outcome, experts said in interviews this week, is that the nation’s credit rating will be downgraded a notch. And if that turns out to be the case, investors and borrowers should be able to ride out any volatility.

Over the last few days, financial advisers have tried to allay investor fears by sending notes to clients with the same message they have delivered in past periods of market uncertainty: As long as you’re diversified across different investments, the best action, in this case, is inaction.

(More here.)