The odds the United States will slip back into recession next year have risen, ratings agency Standard & Poor's said, citing risks from the European debt crisis and budget tightening at year-end.
The US ratings firm raised the chance of the US falling into recession to 25 percent, up from a 20 percent chance estimated in February, as the world's largest economy struggles to recover from a severe 2008-2009 slump.
It also pointed to the looming possibility of the government being forced by existing law to severely cut spending and increase taxes on January 1, the so-called fiscal cliff that would crunch the economy.
"Economic activity has downshifted sharply from earlier this year," S&P said in a report on North American credit conditions amid global uncertainty, dated August 20.
"At the same time, possible contagion from the European debt crisis, the potential so-called 'fiscal cliff', and the risk of a hard landing for China's economy have added greater uncertainty to US economic prospects," it said.
In the second quarter, the world's largest economy grew at a 1.5 percent annual rate, a sharp slowdown from late last year as unemployment remained stuck above 8.0 percent.
S&P underscored concern about the impact of a recession in the 17-nation eurozone, whose economy contracted 0.2 percent in the second quarter. S&P forecast a 0.6 percent contraction this year.
"A double-dip recession in Europe that transmits financial turmoil to the US could push it into recession," the agency said.