Fitch Ratings has downgraded U.S. credit from the highest rating, citing the nation’s growing debt and its eroding political stability.
“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,” the ratings agency said Tuesday. “The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management.”
The ratings agency also cited the U.S.’ “complex budgeting process” and its lack of a medium-term financial planning, relative to its peers, in explaining the downgrade to AA+, from the U.S.’ previous AAA level. These factors, combined with the fiscal shocks from the pandemic, new spending and tax cuts, have brought the debt to 113% of the national economic output, well above pre-pandemic levels.
Treasury Secretary Janet Yellen decried the new rating, calling it “arbitrary and based on outdated data.”
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