Standard & Poor's Defends Lowering U.S. Credit Rating

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Overall economy would be hit with 1 percent drop in GNP, translating into 640,000 lost jobs. This slowing increases the risks that the U.S. will have a second dip into recession. It also means less tax revenue, so the potential for additional debt increases.

As the economy slows, expect the stock market to react. Investors buy shares to get a piece of growing profits. A slowing economy means profits grow less rapidly or go down. The relative value of a share of anything will go down. Some experts predict a downgrade could force stocks to sell-off by 6 percent to 10 percent in short order.

While the downgrade comes as a shock to some, causing many to speculate the influence the change will have on global markets, financial analyst and President of Envision Capital Marilyn Cohen said a AA+ rating isn't so bad.

"People have said this is going to be a disaster, it's going to be Armageddon. The truth of the matter is, if investors panic where they are they going to go? It's not a disaster," she said. "It won't be Armageddon because we still have the ability to make our interest payments on US treasuries and it is not that large of a percentage of our federal debt."

ABC News' Jake Tapper, Steven Portnoy, Susanna Kim and Michael S. James contributed to this report.

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