Overview
- Fitch affirmed the United States' long-term sovereign rating at AA+ with a stable outlook on Thursday, restating the agency's 2023 concerns about fiscal governance.
- The agency cut its near-term growth forecast to 1.9% for both 2026 and 2027 and said labor demand has weakened and job creation has fallen significantly this year.
- Fitch projects inflation will not return to target until the end of 2028, a view that reduces odds of further near-term Fed hikes and keeps bond yields sensitive to policy shocks.
- The ratings firm warned that Medicare and Social Security spending will push costs up by nearly one percentage point of GDP by 2032 and that more frequent or prolonged government gridlock and shutdowns would worsen fiscal pressures.
- Despite those risks, Fitch cited the U.S. economy's size, high per-capita income and exceptional financing flexibility as reasons to hold AA+, and markets treated the decision largely as a reaffirmation with muted immediate impact.