© Reuters. The breathtaking view of the Manhattan skyline from the Summit at One Vanderbilt observatory in New York City, captured on April 14, 2023. REUTERS/Mike Segar/File Photo
On Friday, Fitch, the credit ratings agency, reaffirmed the United States’ long-term foreign currency sovereign credit rating at “AA+” and maintained a “stable” outlook.
In its analysis, Fitch projected a deceleration in the country’s gross domestic product (GDP) growth for 2024, despite the economy demonstrating resilience in the face of increased interest rates.
The U.S. economy experienced a growth of 2.5% in 2023, which was influenced in part by the reintroduction of fiscal policy easing, as evidenced by the substantial general government (GG) deficit in 2023.
Fitch calculated that the GG deficit had risen to 8.8% of GDP in 2023 and anticipated a reduction to 8% of GDP in 2024, driven by escalating revenue expansion, reduced expenditures, and the cessation of certain significant one-time expenditures related to deposit insurance in 2023.
“Despite these improvements, the interest burden is expected to continue increasing due to the higher debt load and the impact of elevated interest rates,” Fitch emphasized.
The agency highlighted the significance of the results of the upcoming November presidential and congressional elections in influencing policymaking and the execution of legislation.
In a similar context, Moody’s, a counterpart to Fitch, downgraded the country’s credit rating outlook to “negative” in November, citing substantial fiscal deficits and a decline in debt affordability.