An unexpected warning about America's soaring debt jolted financial markets and threatens wider consequences for the U.S. economy, even as a new sense of realism emerges in the stalemate between President Obama and congressional Republicans over fiscal policy.

The shot across the government's bow came from Standard & Poor's, a leading credit rating firm, which served notice that there was a 1-in-3 chance that it would lower the now-sterling AAA rating on U.S. debt in the next two years.

The mere prospect of such a downgrade, which until recently was considered unthinkable, could drive most U.S. interest rates higher, imposing new strains on consumers and the still-fragile economic recovery.

S&P said it still considered the U.S. to be worthy of the highest credit rating, but that failure to address mounting budget deficits by 2013 would leave the country's finances "meaningfully weaker" than those of other AAA-rated nations, such as Germany and Singapore.

Because of that risk, S&P reduced its outlook for the U.S. rating to "negative" from "stable." Changing the outlook often is a first step toward cutting a rating.

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