The United States of America's rating as a long term foreign currency issuer was downgraded Tuesday evening from “AA+” from “AAA.” The change was made and detailed by Fitch Ratings.
Fitch Ratings has downgraded the United States of America's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'AA+' from 'AAA'. The Rating Watch Negative was removed and a Stable Outlook assigned. The Country Ceiling has been affirmed at 'AAA'.
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.
Erosion of Governance: 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. The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management.
Treasury Secretary Janet Yellen issued a statement disagreeing with the downgrade, along with White House Press Secretary Karine Jean Pierre, and remains focused on climate change.
US gets credit downgrade and this is where @secyellen priority is. LMAO https://t.co/WaM5hd3Zx0 pic.twitter.com/0APSfISdlk
— Dan Stringer, SEC Pimp (@Danstringer74) August 1, 2023
Meanwhile, fiscal responsibility groups are sounding the alarm.
“As Washington continues to burn through American taxpayers’ hard-earned dollars with little to no remorse over our nation’s harrowing $32 trillion debt, this news is to be expected. The downgrade is a sobering acknowledgement that lawmakers from both sides of the aisle are unwilling to address our fiscal state. This is a stark warning to Washington that our country’s financial course must be corrected," FreedomWorks President Adam Brandon said about the change.
“The current trajectory of excessive government spending poses significant risks to our economy. With our nation racing toward $50 trillion in debt by 2030, House Republicans have an opportunity to confront this issue and keep their promise to rein in out-of-control spending. Members of Congress must collectively address our perilous financial situation and prioritize fiscal responsibility," he continued.
BIDENOMICS:
— RNC Research (@RNCResearch) August 1, 2023
"Fitch has downgraded the U.S. credit rating to AA+ from AAA," a ranking the U.S. had held at Fitch since 1994. pic.twitter.com/J7oPMi7Wip