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In a surprise move, the Fitch agency decided overnight to cut its rating on the United States to AA+ (with a stable outlook), thus removing the maximum value of AAA from the world‘s largest economy. In its assessment Fitch points to “the worsening of fiscal conditions over the next three years” and “last-minute solutions” and “repeated debt ceiling negotiations that threaten the government’s ability to meet its spending commitments” .
Fitch’s move has provoked a furious backlash from Joe Biden’s administration. For the secretary of the Treasury, Janet Yellen, Fitch’s decision is “arbitrary” and “obsolete”, as it is based on outdated information. The White House “deeply disagrees with Fitch’s decision,” said spokeswoman Karine Jean-Pierre, stressing that the downgrade “defies reality at a time when President Biden” has fostered one of the most robust recovery among the major economies. “It is clear that Republican extremism is a continuing threat to our economy,” the White House added.
Yellen: “The US economy is solid”
“Fitch’s decision doesn’t change what Americans, investors, and people around the world already know: that Treasuries remain the world‘s preeminent safe and liquid asset, and that the U.S. economy is fundamentally strong.” Yellen said.
“This is a bizarre and unfounded decision to make at this time,” the administration also said, adding that, according to Fitch’s own analysis, US governance has improved during the Biden presidency. “Fitch’s decision simply defies common sense, it makes no sense to cut the rating now as a result of what has truly been a disaster caused by the last administration and the reckless actions of Congressional Republicans,” said a senior government official. American.
Fitch come S&P
Fitch had signaled the possibility of a downgrade as early as May, then held a wait-and-see stance in June when the debt ceiling crisis was resolved, but said it would conclude the downgrade in the third quarter of the year. But debt issues and governing capacity, even with Congress split between the Democratic-majority Senate and the Republican-majority House, seemed to provide solid guarantees at this stage.