Moody’s Ratings made a big sector call last week in its U.S. Public Finance outlook:
Moody’s Investors Service has revised its outlook for the US local governments to stable from negative as housing markets continue to stabilize, municipalities’ fund balances remain stable, and cities and school districts modify their expenses.
Moody’s has held a negative outlook on local governments for five years, so the outlook change was a big one. But it had some caveats:
Conditions, however, will remain more difficult for local governments than they were before the 2008 recession, and pockets of serious credit pressure remain.
Moody’s called the state of local governments – the “new stable,” saying, “The ‘new stable’ will be an era of constrained resources, but the worst is over for local governments in most of the country,” says Naomi Richman, a Moody’s Managing Director.” I think local officials will welcome the moniker.