RJ and Makay

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Europe is on its way to a recession, and the resulting slowdown could impact the U.S. economy in the second half of 2012, according to Chris Wolfe, chief investment officer of Merrill Lynch Private Banking and Investment Group.  Germany recently reported that its economy shrank at the end of last year, and the European Union as a whole revised its economic growth figures for the third quarter to 0.1%, its slowest pace in over two years.

Though in the offing for some time, it's still a shock to see a credit agency move toward downgrading U.S. debt. Today, Standard & Poor's (S&P) Ratings Services reduced its outlook on the U.S. to "negative," potentially setting the stage for a downgrade from triple-A status in the near future.

"More than two years after the beginning of the recent crisis, U.S. policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures," explains S&P credit analyst Nikola G. Swann. The chance of a U.S. downgrade within two years is at least one in three, Swann estimates.

U.S. consumer sentiment rose in April as worries about the impact of higher oil prices on economic growth eased slightly, according to Reuters.

The consumer sentiment index calculated by Reuters and the University of Michigan has spiked 3% so far this month to 69.6 from 67.5 in March. Although the latest reading beat the consensus forecast of 68.5 among economists polled by Reuters, it's still below February's result (but not March's), Reuters reports.