Wednesday, August 02, 2023

Fitch Downgrades US Credit Rating To AA+


Fitch Ratings has downgraded the United States' credit rating from AAA to AA+. The downgrade comes as a result of concerns about the country's fiscal health, as well as the political gridlock that has made it difficult to address these concerns.

Fitch cited a number of factors in its decision to downgrade the US rating. These include:

  • The country's growing debt burden, which is now over $30 trillion.
  • The projected decline in the US economy, which is expected to grow at an average annual rate of just 1.2% over the next three years.
  • The repeated debt ceiling crises that have threatened the government's ability to pay its bills.
  • The political gridlock in Washington, which has made it difficult to pass legislation that would address the country's fiscal problems.

The downgrade is a significant blow to the US government's reputation and could make it more difficult for the government to borrow money in the future. It could also lead to higher interest rates, which would make it more expensive for businesses and consumers to borrow money.

The US government has responded to the downgrade by saying that it is "confident" in the country's fiscal future. However, the downgrade is a reminder that the US government's finances are not as strong as they once were. It is also a sign that the political gridlock in Washington is having a negative impact on the country's economy.

The Treasury Department responded to the downgrade by calling it "arbitrary" and "unjustified." The department said that the US government remains "the most creditworthy sovereign in the world" and that the downgrade "does not reflect the underlying strength of the US economy."

The Treasury is ignoring the very likely probability that the US is heading towards a government shutdown later this year.

The debt trajectory is NOT sustainable and the US is now spending 14% of tax revenues in interest payments.


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