Fitch Ratings slashes the U.S. long-term foreign currency issuer default rating from AAA to AA+.
Ouch.
The last time this happened was in 2011.
Fitch alluded to “expected fiscal deterioration over the next three years,” soaring debt, and erosion of governance.
“The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management,” said Fitch.
“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.”
If fiscal deterioration was the concern, then why not a greater downgrade?
$32 trillion national debt.
$2.12 trillion rolling 12-month deficit.
$1 trillion annual interest payments.
But this was certainly an out-of-nowhere stunner.
The White House was not pleased.
“It defies reality to downgrade the United States at a moment when President Biden has delivered the strongest recovery of any major economy in the world,” Press Secretary Karine Jean-Pierre said.
Meanwhile, Fitch also anticipates a mild recession in the fourth quarter of 2023.
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