Fitch Maintains U.S. Credit Rating with a Stable Outlook

Fitch Ratings has recently confirmed the Unite

d States’ long-term foreign currency sovereign credit rating at “AA+” and maintains a stable outlook. This decision reflects the agency’s view on the country’s economic resilience despite facing challenges such as higher interest rates.

In its analysis, Fitch projected a slowdown in the U.S. gross domestic product (GDP) growth for 2024, following a 2.5% growth rate in 2023. This performance in 2023 was partly supported by fiscal policy adjustments, including a significant general government (GG) deficit.

The GG deficit, which reached 8.8% of GDP in 2023, is expected to narrow to 8% of GDP in 2024. Fitch attributes this forecasted improvement to an increase in revenue, reduced spending, and the absence of large one-off expenditures related to deposit insurance that were present in 2023. However, the agency cautioned that the interest burden on the economy is likely to continue its upward trajectory due to the increased debt burden and the effects of higher interest rates.

An essential factor in the future of U.S. economic policy and fiscal management, according to Fitch, will be the outcome of the November presidential and congressional elections. These elections could significantly influence the government’s capacity to enact and implement new legislation.

This affirmation comes in contrast to Moody’s recent adjustment, where the outlook on the U.S. credit rating was downgraded to “negative.” Moody’s cited concerns over large fiscal deficits and declining debt affordability as key reasons for their outlook revision.

Fitch’s stable outlook suggests confidence in the U.S. economy’s underlying strengths and its ability to navigate through fiscal and monetary challenges, while also highlighting the importance of future political developments on the nation’s economic policies.