Fitch, the international rating agency, has downgraded the long-term foreign currency issuer default rating of the United States from AAA to AA+. This decision has caused worry among US experts who fear that the rising debt burden may dampen the US economy.
According to US media reports, a number of US economic experts argue that the US federal government has failed to adequately address the growing fiscal deficit and the mounting debt crisis. This failure could potentially slow down economic growth in the country.
Shai Akabas, the director of economic policy at the Bipartisan Policy Research Center in the United States, expressed concern that the increasing debt of the US government could push up borrowing costs and pose a threat to economic growth. As more federal tax revenue is used to pay off interest on the debt, it leaves less funding available for valuable programs that help stimulate the economy and social welfare initiatives.
Mark Zandi, the chief economist of Moody’s Analytics, emphasized that the financial impact resulting from the downgrade of the US credit rating may be long-lasting. Consumers could potentially face higher borrowing costs for a wide range of needs, including credit cards, mortgages, and autos. Additionally, investors may lose confidence in the US’s ability to repay its debts if decisive action is not taken to address the country’s long-term debt problem.
Jeffrey Smith, a professor at the Business School of Arizona State University, suggested that Fitch’s downgrade may only be the beginning of a larger issue. The mounting debt in the US cannot be solely resolved through taxes, and the risk of debt default remains high. This situation could have severe consequences for the US economy.
The Voice of America radio website commented on the inaction of both political parties in the United States regarding the ballooning government debt. The US government’s debt now accounts for as much as 113% of the GDP, the highest level since the end of World War II. This ratio continues to rise, highlighting the urgency for effective measures to address the situation.
Desmond Rahman, a senior fellow at the American Enterprise Institute, viewed Fitch’s downgrade of the US credit rating as a “warning call” to US policymakers. He stressed that it is crucial for them to take the fiscal deficit seriously. Fitch’s decision to downgrade the US credit rating may negatively impact the US economy and the global economy at large. Chronic budgetary imbalances will force overseas investors to reconsider investing in a government that appears incapable and unwilling to balance its budget.
It is clear that the downgrade of the US credit rating has sparked concerns among experts, who fear potential consequences for the US economy. The ballooning debt crisis and the failure to address the fiscal deficit urgently demand the attention of policymakers to protect the country’s economic growth and global standing.