A deal to avert the cuts proved elusive in talks at the White House on Friday, meaning that government agencies will now begin to hack a total of $85 billion from their budgets between Saturday and Oct. 1.

"We believe the sequester will be temporary, replaced in the second quarter by a long-term package of spending cuts and revenue increases," S&P said in a statement. "If this proves true, we think the sequester would still have only a mild downside effect on GDP growth this year."