Fitch Ratings warns US credit grade faces pressure from fiscal risks
Updated
Updated · Bloomberg · May 3
Fitch Ratings warns US credit grade faces pressure from fiscal risks
9 articles · Updated · Bloomberg · May 3
A Thursday report by Richard Francis and Shelly Shetty said US debt is far above other AA-rated sovereigns and flagged fiscal deterioration this year.
Fitch said tax cuts in the One Big Beautiful Bill Act are expected to widen the deficit, though tariff revenue would provide some offset.
The agency said the outlook increases the importance of November's Congressional mid-term elections as investors watch US fiscal policy and debt sustainability.
With debt service costs exceeding defense spending, is the U.S. economy now facing an unavoidable fiscal crisis?
As tax cuts and court rulings widen the deficit, what can protect the dollar's global reserve status?
US Fiscal Crisis Deepens: Deficits Near 8% of GDP and Debt Surpasses 120% by 2027
Overview
Fitch Ratings warns that the U.S. faces a worsening fiscal outlook with government deficits projected at 7.9% of GDP in 2026 and 2027, driven by deep tax cuts and a Supreme Court ruling that cuts tariff revenues. These deficits will push debt above 120% of GDP by 2027, far exceeding peers and risking further credit downgrades. Rising spending pressures from an aging population add to the strain. The 2023 debt ceiling confrontation triggered Fitch's downgrade, while Moody's 2025 downgrade led to higher borrowing costs, impacting consumers and businesses. This unsustainable path fuels global market concerns, including rising sovereign yields and pressure on the dollar's reserve status.