- The United States has had such a rating from Fitch since 1994.
- The White House said the agency’s conclusions contradict reality.
The Fitch agency has downgraded the U.S.’s long-term rating to AA+ from AAA, CNBC reported. The reason for the decision was the “expected deterioration of the fiscal situation over the next three years,” erosion of governance and rising overall debt.
“Repeated political standoffs over the public debt limit and last-minute decisions have undermined confidence in financial management,” Fitch said in a statement.
In May, the agency placed the country’s AAA rating under negative control because of problems with government debt. At the time, lawmakers debated the topic, and United States President Joe Biden signed the national debt ceiling bill into law on June 2, just days before the “X date” of June 5.
In addition, Fitch found that the government’s budget deficit had increased. They projected that this deficit could widen to 6.3 percent of gross domestic product in 2023, up from 3.7 percent in 2022.
The agency also noted that a combination of tight credit conditions, lower business investment and slower consumption could lead to a “mild” recession in the fourth quarter of 2023 and the first quarter of next year.
The White House disagreed with this judgment by the agency. Spokeswoman Karine Jean-Pierre said:
“Downgrading the United States at a time when President Biden has delivered the strongest economic recovery of any major economy in the world is contrary to reality.”
Remember, in early June, President Biden signed legislation that suspends the U.S. debt limit until January 1, 2025.
At the beginning of June, President Biden signed a bill that suspends the U.S. debt limit until January 1, 2025.