On Tuesday, Fitch Ratings downgraded the United States' credit rating from AAA to AA+.
The rating has a stable outlook, which means Fitch does not anticipate any additional changes.
S&P downgraded the United States' rating more than ten years ago, to an equivalent AA+.
For the US, Moody's continues to give the highest rating.
“The rating downgrade of the United States reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to ‘AA’ and ‘AAA’ rated peers over the last two decades that has manifested in repeated debt limit standoffs and last-minute resolutions,” Fitch said in its statement explaining why it slashed the country’s rating.
According to Fitch, it expects “tighter credit conditions, weakening business investment, and a slowdown in consumption will push the U.S. economy into a mild recession” in the final quarter of 2023 and the first quarter of 2024. The ratings agency expects another increase in interest rate by the Federal Reserve in September.
“In Fitch’s view, there has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025. The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management,” the ratings agency said.
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