WASHINGTON - Escalating budgetary pressures from increased demand for social services, retiree benefits, and infrastructure, paired with volatile municipal market conditions and major revenue shortfalls, have states facing serious financial pressures and a negative outlook for the next 12 to 18 months, Moody's Investors Service said yesterday.

However, despite the continued recession and bleak outlook, Moody's does not expect "wholesale" rating downgrades of states, the rating agency said in a report released yesterday.

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