Please note this statement from Fitch does not make mention of Donald Trump.
Fitch announced Tuesday it has officially downgraded the United States'
RATING ACTION COMMENTARY
Fitch Downgrades the United States' Long-Term Ratings to 'AA+' from 'AAA'; Outlook Stable
Tue 01 Aug, 2023 - 5:13 PM ET
"Fitch Ratings - London - 01 Aug 2023: Fitch Ratings has downgraded the United States of America's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'AA+' from 'AAA'. The Rating Watch Negative was removed and a Stable Outlook assigned. The Country Ceiling has been affirmed at 'AAA'.
A full list of rating actions is at the end of this rating action commentary.
KEY RATING DRIVERS
Ratings Downgrade: The rating downgrade of the United States reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to 'AA' and 'AAA' rated peers over the last two decades that has manifested in repeated debt limit standoffs and last-minute resolutions.
Erosion of Governance: In Fitch's view, there has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025. The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management. In addition, the government lacks a medium-term fiscal framework, unlike most peers, and has a complex budgeting process. These factors, along with several economic shocks as well as tax cuts and new spending initiatives, have contributed to successive debt increases over the last decade.
Additionally, there has been only limited progress in tackling medium-term challenges related to rising social security and Medicare costs due to an aging population.
Rising General Government Deficits: We expect the general government (GG) deficit to rise to 6.3% of GDP in 2023, from 3.7% in 2022, reflecting cyclically weaker federal revenues, new spending initiatives and a higher interest burden. Additionally, state and local governments are expected to run an overall deficit of 0.6% of GDP this year after running a small surplus of 0.2% of GDP in 2022. Cuts to non-defense discretionary spending (15% of total federal spending) as agreed in the Fiscal Responsibility Act offer only a modest improvement to the medium-term fiscal outlook, with cumulative savings of USD1.5 trillion (3.9% of GDP) by 2033 according to the Congressional Budget Office. The near-term impact of the Act is estimated at USD70 billion (0.3% of GDP) in 2024 and USD112 billion (0.4% of GDP) in 2025. Fitch does not expect any further substantive fiscal consolidation measures ahead of the November 2024 elections.
Fitch forecasts a GG deficit of 6.6% of GDP in 2024 and a further widening to 6.9% of GDP in 2025. The larger deficits will be driven by weak 2024 GDP growth, a higher interest burden and wider state and local government deficits of 1.2% of GDP in 2024-2025 (in line with the historical 20-year average). The interest-to-revenue ratio is expected to reach 10% by 2025 (compared to 2.8% for the 'AA' median and 1% for the 'AAA' median) due to the higher debt level as well as sustained higher interest rates compared with pre-pandemic levels.
General Government Debt to Rise: Lower deficits and high nominal GDP growth reduced the debt-to-GDP ratio over the last two years from the pandemic high of 122.3% in 2020; however, at 112.9% this year it is still well above the pre-pandemic 2019 level of 100.1%. The GG debt-to-GDP ratio is projected to rise over the forecast period, reaching 118.4% by 2025. The debt ratio is over two-and-a-half times higher than the 'AAA' median of 39.3% of GDP and 'AA' median of 44.7% of GDP. Fitch's longer-term projections forecast additional debt/GDP rises, increasing the vulnerability of the U.S. fiscal position to future economic shocks.
Medium-term Fiscal Challenges Unaddressed: Over the next decade, higher interest rates and the rising debt stock will increase the interest service burden, while an aging population and rising healthcare costs will raise spending on the elderly absent fiscal policy reforms. The CBO projects that interest costs will double by 2033 to 3.6% of GDP. The CBO also estimates a rise in mandatory spending on Medicare and social security by 1.5% of GDP over the same period. The CBO projects that the Social Security fund will be depleted by 2033 and the Hospital Insurance Trust Fund (used to pay for benefits under Medicare Part A) will be depleted by 2035 under current laws, posing additional challenges for the fiscal trajectory unless timely corrective measures are implemented. Additionally, the 2017 tax cuts are set to expire in 2025, but there is likely to be political pressure to make these permanent as has been the case in the past, resulting in higher deficit projections.
Exceptional Strengths Support Ratings: Several structural strengths underpin the United States' ratings. These include its large, advanced, well-diversified and high-income economy, supported by a dynamic business environment. Critically, the U.S. dollar is the world's preeminent reserve currency, which gives the government extraordinary financing flexibility.
Economy to Slip into Recession: Tighter credit conditions, weakening business investment, and a slowdown in consumption will push the U.S. economy into a mild recession in 4Q23 and 1Q24, according to Fitch projections. The agency sees U.S. annual real GDP growth slowing to 1.2% this year from 2.1% in 2022 and overall growth of just 0.5% in 2024. Job vacancies remain higher and the labor participation rate is still lower (by 1 pp) than pre-pandemic levels, which could negatively affect medium-term potential growth.
Fed Tightening: The Fed raised interest rates by 25bp in March, May and July 2023. Fitch expects one further hike to 5.5% to 5.75% by September. The resilience of the economy and the labor market are complicating the Fed's goal of bringing inflation towards its 2% target. While headline inflation fell to 3% in June, core PCE inflation, the Fed's key price index, remained stubbornly high at 4.1% yoy. This will likely preclude cuts in the Federal Funds Rate until March 2024. Additionally, the Fed is continuing to reduce its holdings of mortgage backed-securities and U.S. Treasuries, which is further tightening financial conditions. Since January, these assets on the Fed balance sheet have fallen by over USD500 billion as of end-July 2023.
ESG - Governance: The U.S. has an ESG Relevance Score (RS) of '5' for Political Stability and Rights and '5[+]' for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption. Theses scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in Fitch's proprietary Sovereign Rating Model. The U.S. has a high WBGI ranking at 79, reflecting its well-established rights for participation in the political process, strong institutional capacity, effective rule of law and a low level of corruption."
PLEASE READ ON https://www.fitchratings.com/research/s … 01-08-2023
Will Moody's be next? Source https://www.reuters.com/markets/us/us-c … 023-05-26/
"The move leaves Moody's as the lone major credit rating agency to not take formal steps to reassess the nation's credit reputation. An agency spokesperson said Thursday that Moody's still has the nation rated "AAA" with a stable outlook -- its highest possible rating.
But Moody's is leaving the door open to a similar move to Fitch, telling Reuters a change in tone among Washington negotiators could spur such a warning."
Would you like to know how bad things are?
This video of San Francisco, probably the precursor to where the rest of the nation's big cities will likely be heading.
https://www.youtube.com/watch?v=5UWIyGDnHmk
This is where "Progressive" Democracy takes you.
https://www.youtube.com/watch?v=F0MWxbN89Aw
You won't be seeing this reality in your MSM news.
OMG --- can't believe Market Street. We stopped visiting SF some years back due to the decline. So funny in the video you offered, I saw the building where we always rented a condo. Right above a now-closed H&M.
What a sad situation, it was once one of the most existing and wonderful cities in the US.
My son's business years ago had the main headquarters, they have since moved the office to Royal Oak Mi. And main hq to Miami. I love the move, we now get to enjoy Miami.
I think the majority of East Coast Americans are completely unaware of what is going on in San Fran and most of the major cities on the West Coast, if they were, they would be a lot more concerned... but our MSM makes sure it never gets covered.
Places like Portland, Seattle, San Fran, Los Angeles are becoming untenable.
I will be honest, I really did not realize Market Street was now as it is. It was one of the most high-rent districts in SF. I think the media is controlling pretty much the narrative, and you are right many have no idea of what is going on in these Democratic cities.
A multi billion dollar district turned into a Ghetto practically overnight.
That's how fast change can come. What is sad, is those very people who ran Twitter, AT&T, Facebook, etc. that once filled those buildings and created (voted into power) that "utopian" reality are the very same beliefs/people in control of the Federal government and all the major corporations and MSM today.
Whether its Biden's Administration or Disney's Executives, they are the controlling/dominant factions of America today.
So... that gives you a good idea of where we are headed.
You know Ken, I can see that America has one chance at this point to try to pull out of this mess, and that would be a win in 2024. Other than history might be penning a second civil war.
Perhaps Americans will wake up and take a long look around, and see the destruction that has been done in such a short time.
The cracks will be paved over until after November 2024.
Then... maybe the can runs out of road.
I won't be surprised if Moodys downgrade. The writing is on the wall. Big money wants Joe and the Democrats out. Fitch's statement was scathing.
In my view this downgrade will kick off an economic slowdown, and investors will worry they won't be able to make money in the future. Other reasons include political uncertainty, inflation, rising interest rates, and unexpected events from this administration.
If Moody downgrades the market will plummet.
Big Money wants Joe and the Democrats out?
They are the reason why Uncle Joe is there.
Facebook, Microsoft, Bill Gates, George Soros, the BIG money is why the Democrats get the positive coverage they do, why our nation is in the decline it is in.
I see your point, but the big money, banks OPEC might be thinking differently. I won't be surprised to see Moody's downgrade the US, and OPEC they already have Biden cornered. Gas is on its way back up due to their not hearing his begging to pump more.
Yes, Dems get their money from all you mentioned, but if this economy tanks any further, we can expect a country very much unhappy and looking for new. People are living on cards, and taking from savings, Total credit card debt stood at $986 billion at the start of 2023, unchanged from the record hit at the end of 2022. This is going to hit the fan unless Joe wants to pay off their visa as he hopes to pay off school loans.
https://www.cbsnews.com/news/credit-car … data-2023/
Yes, clearly OPEC has taken a stand... but not against Biden in particular.
As I have stated elsewhere, we are in the midst of a global war. Right now that war is mostly economic, and nations are choosing sides.
Saudi Arabia and OPEC have shifted away from America's Imperialism, choosing to back Russia and BRICS... this is a very wise thing for ALL BRICS and OPEC nations to do.
If America/NATO wins the war against Russia, they will be able to maintain the West's dominance over the globe for as long as you and I are alive, OPEC will become irrelevant, China will be crippled, BRICS will be fractured.
EVERYTHING China, OPEC and BRICS hope to accomplish will be delayed (at best) for an entire generation IF we are successful in toppling Russia.
The NWO sought by those in control of America/West cannot achieve its desired goals without Russia's downfall.
Saudi Arabia is aware of its precarious situation and this is why it switched sides, if America defeats Russia and gains control of its resources, Saudi Arabia becomes irrelevant to America's needs.
I think a student of history can see what is happening to the United States has happened in the past to other great civilizations.
Being destroyed from the inside. It's what took down the Roman Empire as well as the British Empire and many Chinese Dynasties.
I just feel bad that I am witnessing it right now.
Just like in history, the people who are causing it don't know they're doing it.
Like the old saying goes, "Those who don't learn from history are damned to repeat it."
While I hesitate to contribute to this hubber's discussions, I can't stand by while a falsehood is advanced. There are many sources on this issue, but a quality source is: https://evonomics.com/economists-agree- … t-reasons/
"While you can easily cherry-pick brief periods and economic measures that show superior economic performance under Republicans, over any lengthy comparison period (say, 25 years or more), by pretty much any economic measure, Democrats have outperformed Republicans for a century."
Two minutes on Google will offer many others.
What is the difference between Bush losing Trillions in his war on Iraq, and Biden losing Trillions (ultimately) in Ukraine?
What party exactly has been running San Fran, LA, Portland, Seatle, and is responsible for the sh*% holes they have become?
Portland
https://www.youtube.com/watch?v=ZsUpRS8tqAA
Seattle
https://www.youtube.com/watch?v=MoJBJ2Q9bTI
Its not just in California, its every major city on the west coast.
We have a Federal Government more interested in perpetuating war against Russia, or Al Quida, or Iraq, or who-ever as they piss away Trillions (making the Military Industrial Complex very happy).
And we have State governments in CA, WA, OR, and a few others that are completely devolving into chaos in pursuit of their "progressive" agendas.
"While I hesitate to contribute to this hubber's discussions, I can't stand by while a falsehood is advanced. "
What do you mean by this statement? I see only views thus far shared,
So, is it acceptable to say falsehoods are being advanced?
Views are com about using many variables.
" Scholars tend to identify authoritarian political leaders based on certain tactics, such as: politicizing independent institutions, spreading disinformation, aggrandizing executive power, quashing dissent, targeting vulnerable communities, stoking violence, and corrupting elections."
-Dresden, Jennifer; Baird, Aaron; Raderstorf, Ben (2022). The Authoritarian Playbook United States: Protect Democracy.
I just happened to see her comment Sharlee...so rude!!
You are the best at opening up interesting topics for discussion.
My two cents, for what it's worth.. :-)
"While I hesitate to contribute to this hubber's discussions, I can't stand by while a falsehood is advanced. "
I would be so lucky she would pass this one by. LOL
Yes, I found her comment rude, and catty... I don't play catty well, I think females that do -- oh well won't go there.
it appears that she may have encountered difficulty in comprehending individuals presenting factual information or expressing carefully considered perspectives. Repeatedly diminishing the thoughts of others does not align well with my personal values.
Perhaps she could consider pausing to recognize that the thread constituted a comprehensive statement from Fitch. Within this statement, Fitch provided a rationale for their downgrade, which notably diverges from the narrative propagated by certain segments of the media.
It becomes quite evident that she might not have thoroughly perused the statement issued by Fitch that I offered. I have noted frequently she just critiques others' views and does not decipher when a user is sharing a view or a fact.
OPINION - but another point of view
https://www.washingtonpost.com/opinions … n-threats/
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