Moody's Investors Service continues to have a negative outlook on the US states sector because of uneven employment and tax revenue growth and spending pressures from Medicaid and pensions, despite signs of economic stabilization across the country. Repercussions from possible reductions in the federal deficit, which could damage economic growth, are also a risk for states.

"States are experiencing a slow recovery, but still face economic and fiscal challenges," says Moody's Assistant Vice President and Analyst Kimberly Lyons, main author of the report "US States Sector Outlook Remains Negative."

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