Fitch downgrades U.S. long-term credit rating from AAA to AA+ for the first time since 2011.
Fitch Ratings
-Fitch Ratings downgraded its assessment of US sovereign debt from its top-notch "AAA" to one notch below that, "AA+"
-The last time US debt got downgraded was in 2011
-Fitch Ratings downgraded its assessment of US sovereign debt from its top-notch "AAA" to one notch below that, "AA+"
-The last time US debt got downgraded was in 2011
-Fitch cited “the expected fiscal deterioration over the next three years,” the federal government's high debt burden, and the "erosion of governance" compared with other AAA-rated countries.
Well is anything going to change with Fitch rating change as they are like Hindi movie police who come in the last to arrest the villain. Just remember that dollar is going to be supreme and these actions may not have much consequences.
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Here's why:
1. Erosion of Governance: Repeated debt-limited political standoffs have eroded confidence in fiscal management
2. Rising Government Deficits: Fitch expects the deficit to rise to 6.3% on GDP in 2023 from 3.7% in 2022
3. General Government Debt Rising: Fitch expects further increases in debt-to-GDP going forward
4. Unaddressed Medium-Term Fiscal Challenges: Rising rates are resulting in an increase in interest costs and tax cuts set in 2017 are set to expire in 2025, adding political pressure
5. Fed Interest Rate Hikes: Fitch expects one more rate hike by September which adds more pressure on ratings
Fitch made it clear that failure to address governmental spending issues and macroeconomic policy could lead to MORE negative revisions
