Fitch Downgraded U.S. Long-Term Debt Citing Structural Concerns About U.S. Budget Deficits

“Fitch Ratings downgraded the United States’ long-term foreign currency issuer default rating to AA+ from AAA on Tuesday, pointing to “expected fiscal deterioration over the next three years,” an erosion of governance and a growing general debt burden.”“The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management,” said Fitch.”The agency also noted that a combination of tightening credit conditions, weakening business investment and a slowdown in consumption could lead the economy into a “mild” recession in the fourth quarter of 2023 and first quarter of next year.”“It defies reality to downgrade the United States at a moment when President Biden has delivered the strongest recovery of any major economy in the world,” press secretary Karine Jean-Pierre said.

The US cannot mathematically sustain their debt & deficits w/o sustained negative real rates.

So don’t tell me the downgrade doesn’t make sense; tell me which “suckers at the card table” collectively have a big enough balance sheet to hold $32T in debt at negative real rates. pic.twitter.com/HKWu4N6DZ9

— Luke Gromen (@LukeGromen) August 1, 2023

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