Standard & Poor’s is a division of The McGraw-Hill Companies that offers financial services and publishes financial research and analysis on stocks and bonds. They are known for offering stock-market indices (a given nation’s stock market performance) such as the U.S.-based S&P 500, the Canadian S&P/TSX, India’s S&P CNX Nifty, and Australian S&P/ASK 200.

It was on this day, Aug 5, 2011, that Standard & Poor’s downgraded the U.S. credit rating to one notch below AAA for the first time ever, setting off economic alarm bells across the world. An AAA rating means that the obligor has an “extremely strong capacity to meet its financial commitments.” Dropping down to AA+ meant that the U.S. only has a very strong capacity to meet its financial requirements. It has high quality with very low credit risk but is susceptible to long-term risks. The downgrade came after the Budget Control Act of 2011. S&P believed the fiscal consolidation plan fell short of what would be necessary to stabilize the government’s debt.

The U.S. Department of Treasury countered their assessment by bringing to attention a $2 trillion calculation error, but S&P responded by saying the error “had no impact on the rating decision.” In fact, if they were to look along a 10 year period, the U.S. debt would be 85% of the 2021 GDP, only slightly less than the 93% had the error gone unnoticed.