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Fitch Downgrades US Credit Rating Over Anticipated 'Fiscal Deterioration'

© AFP 2023 / JOEL SAGETFitch
Fitch - Sputnik International, 1920, 01.08.2023
For the second time, international credit rating agency Fitch has downgraded the US federal government's credit rating, citing dismal economic expectations.
On Tuesday, Fitch said it was downgrading the federal government's credit rating from AAA to AA+ based on "expected fiscal deterioration over the next three years."
"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.
Fitch voiced similar concerns in June, after a showdown over the debt ceiling that risked a default. A deal to raise the ceiling and allow further funds to be paid out came within days of a default and amid months of dire warnings by the US Treasury.
The deal to avert the threatened default in June resulted in a series of agreements about budgetary limits over the next several years, mostly along the lines of demands by Republican lawmakers who saw the debt ceiling crisis as an opportunity to extract such cuts they could not achieve during normal legislative negotiations.
The US Congress building at Capitol Hill in Washington, DC. - Sputnik International, 1920, 15.06.2023
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The last time the US' credit rating was downgraded was in 2011, following a similar budget showdown that came within hours of the government defaulting on its debts.

“I strongly disagree with Fitch Ratings’ decision," US Treasury Secretary Janet Yellen said in a statement, calling Fitch's decision "arbitrary and based on outdated data."

"Fitch’s quantitative ratings model declined markedly between 2018 and 2020 – and yet Fitch is announcing its change now, despite the progress that we see in many of the indicators that Fitch relies on for its decision. Many of these measures, including those related to governance, have shown improvement over the course of this administration, with the passage of bipartisan legislation to address the debt limit, invest in infrastructure, and make other investments in America’s competitiveness," Yellen said.
"Fitch’s decision does not change what Americans, investors, and people all around the world already know: that Treasury securities remain the world’s preeminent safe and liquid asset, and that the American economy is fundamentally strong."
A separate statement later issued by the White House largely echoes Yellen's remarks and underscores that Fitch's decision "defies reality" as US President Joe Biden has navigated the US economy's recovery.

Another rating agency, Moody's, has kept the US government at its highest rating through the tribulations.

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