US credit rating forecast set to negative as public finances are deteriorating

Fitch credit rating agency has set a negative forecast for the creditworthiness of the United States. This may mean that the country’s rating will be lowered in the future. Now Fitch confirmed the US credit rating at AAA, the highest level.

According to Fitch, the reduction in outlook from stable to negative is driven by the deterioration in public finances. Also, according to the rating agency, there is no credible tax plan. In the previous assessment, Fitch already indicated that there were budget deficits and that there was a risk of a high level of public debt. That was before the economic shock that caused the corona crisis.

The US already had the highest sovereign debt of all countries with AAA rating for the coronacrisis. however, the rating agency indicates that the country’s economic strength allows it to bear the higher state debt. Following the crisis, however, next year’s public debt is in danger of reaching more than 130% of gross domestic product.

Fitch also points out that there must be clear fiscal policy. If both Democrats and Republicans do not get a majority of 60 seats in the Senate in the november elections, there will continue to be a political stalemate and there will be no such clarity.

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