The rating agency Fitch has withdrawn the coveted top credit rating from the USA. The rating was lowered by one step from AAA to AA, as Fitch announced on Tuesday. With this, Fitch moves with the competitor S
Nevertheless, the air for the American government on the debt market could now be getting a little thinner. Because conservative investors like to avoid paper that doesn’t have the best rating.
High US debt
After grading by S
Fitch referred, among other things, to the high level of debt in the USA and the tough struggles over the budget. This spring, the week-long tussle over raising the debt ceiling was particularly threatening. Only after weeks of nail-biting did US President Joe Biden’s Democrats and the Republicans reach a compromise. Without the agreement, the US government would have run out of money. A default could have triggered a global financial crisis and an economic downturn.
US Treasury Secretary criticizes the downgrade
But Fitch also pointed to tax cuts and high-spending initiatives that would have led to even higher government debt. Fitch had already announced a rating downgrade in May. The USA does not have to reckon with further adversity for the time being: Fitch has set the outlook to “Stable”.
US Treasury Secretary Janet Yellen said the downgrade was “arbitrary” and based on outdated data. The White House also pointed out that the US economy had recovered particularly quickly from the corona pandemic. That is why it contradicts reality to lower the rating now of all times. At the same time, spokeswoman Karine Jean-Pierre described the “extremism” of some Republicans as “an ongoing threat to our economy.”
