Fitch Ratings stated that the U.S. fiscal landscape is expected to remain largely stable regardless of the outcome of the upcoming presidential election. The agency reaffirmed the United States’ credit rating at “AA+”, highlighting structural advantages such as high per capita income and financial flexibility.
Fitch indicated that the outcomes of the Nov. 5, 2024, presidential and congressional elections would have a significant impact on U.S. economic and fiscal policies. However, the agency expressed the view that the fundamental fiscal situation is likely to remain relatively stable, regardless of the differing economic objectives, tax strategies, and spending proposals of Harris and Trump.
Continuation of tax cuts and fiscal challenges
The agency anticipates that most of the tax cuts enacted under Trump in 2017 will likely be continued by either candidate, affecting revenue and contributing to broader budget deficits. Fitch further remarked that the government has not effectively addressed the substantial fiscal deficits, the increasing debt load, and the projected spending increases related to an aging population.
Previous ratingÂ
Last year, Fitch downgraded the U.S. government’s top credit rating by one notch, prompting a strong reaction from the White House. This downgrade followed a debt ceiling agreement between President Biden and the Republican-led House, which raised the government’s borrowing limit of $31.4 trillion, concluding months of political conflict.
Current rating and long-term concerns
On Thursday, Fitch maintained its rating with a stable outlook, attributing this to the U.S.’s economic resilience and financial flexibility stemming from the issuance of U.S. dollars, the leading global reserve currency. Nevertheless, the agency pointed out that significant fiscal deficits and the debt burden place the U.S. below the median of similarly rated sovereigns and noted that its governance standards fall short compared to its ‘AA’-rated counterparts.
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