"Although the upcoming change in federal administration introduces significant uncertainty for US states, the US state outlook for 2017 remains stable on credit stability and the states' strong powers," the release stated on Tuesday. "Both the rating and sector outlooks are stable for 2017."
Uncertainty lingers due to trade policy proposals by President-elect Donald Trump that could lead to significant changes in state economies and revenues, and especially concerning businesses that lean on foreign trade, the release stated.
Immigration policy changes may also impact businesses in regions that depend on markets linked outside the US, the release added.
If the incoming Trump administration lowers taxes, it may likely lead to an increase in the US federal debt, inflation and interest rates. As a result, US employers could be pressed to raise wages at the state and local levels.
Other issues may include a rise in borrowing costs and obstacles for export-oriented businesses, the release also said.
Fitch Ratings Managing Director Laura Porter stated in the release that biggest concern include potential decisions by the administration that shift costs from the federal government to the states while continuing service level mandates.
