Fitch Downgrades U.S. Credit Rating to AA+ Amid Political Turmoil
Fitch Ratings has downgraded the long-term credit rating of the United States from AAA to AA+, citing the nation's high and growing debt burden and its history of brinkmanship over borrowing authority as factors eroding confidence in fiscal management. This is the second downgrade in America's history and comes two months after narrowly avoiding defaulting on its debt. The ongoing political standoffs and lack of a medium-term fiscal framework, along with the growing levels of U.S. debt, were major considerations for the downgrade. The move could limit the number of investors able to buy U.S. government debt, potentially increasing borrowing costs, although the impact is expected to be limited given the size of the Treasury market and ongoing demand for U.S. Treasury securities. The Biden administration criticized the decision, arguing that it did not reflect the strength of the U.S. economy.