The United States credit rating was affirmed by Fitch ratings agency late on Monday, maintaining the country’s to notch AAA credit rating. However, Fitch cut its long-term rating outlook to negative from stable, “indicating a slightly greater than 50% chance of a downgrade over a two-year horizon.”
Fitch becomes the third ratings agency to warn about the U.S.’s high level of indebtedness
Moody’s also recently warned the US though maintained its triple-A rating, with a negative outlook.
Only Standard and Poor’s dared to differ, and back in August it downgraded the US by one notch to AA+ for the first time due to the debt-ceiling standoff in Congress nearly drove the U.S. to default.
In its statement Fitch acknowledges that the US still reflects strong economic and credit fundamentals. The U.S. dollar’s status as the pre-eminent global reserve currency and depth of the U.S. Treasury market render financing risks minimal and underpin a low cost of fiscal funding.
However, Fitch recognises that there is considerable uncertainty surrounding the economy’s potential output and scope for a period of above trend economic growth. “The longer productive capacity remains idle and unemployment high, the greater the likelihood that the loss of output (and tax receipts) is greater than currently estimated, with negative.”