Fitch Rating Decision
Fitch Ratings has reaffirmed the United States’ long-term sovereign credit rating at ‘AA+’ with a stable outlook. The decision reflects the size of the U.S. economy, its high per-capita income, and the U.S. dollar’s continued role as the world’s dominant reserve currency.
However, Fitch also warned about ongoing challenges, including high fiscal deficits, rising debt, and increased government spending linked to an aging population. The agency projects that U.S. government debt could reach 124% of GDP by 2027.
Impact of Fiscal Policies
Fitch noted that fiscal policies under the Trump administration, including the tax cuts introduced under the One Big Beautiful Bill Act (OBBBA), as well as higher tariffs and deregulation, have influenced government finances. While tariffs have brought in extra revenue, they have not been enough to offset the large budget deficits.
US Growth Outlook
According to Fitch, the U.S. economy is slowing, with growth expected to be only 1.5% in 2025.
Key factors include higher inflation, weaker labor market conditions, and reduced consumer spending.
Looking further ahead, Fitch expects stronger activity in 2026–2027. Accelerated interest rate cuts planned for 2026 are likely to boost domestic demand, helping growth improve to around 2.1% in 2027.
Government Deficit Outlook
- U.S. deficit expected to narrow to 6.9% of GDP in 2025.
- Deficit projected to widen again to 7.8% of GDP in 2026.
Rising interest costs and spending pressures from an aging population remain the main drivers of elevated deficits.
S&P Global Ratings Update
S&P Global Ratings also reaffirmed the U.S. sovereign credit rating at ‘AA+/A-1+’ with a stable outlook. The rating agency cited the country’s resilient economy but noted that debt levels remain very high, close to 100% of GDP.
S&P forecasts U.S. economic growth to average around 2% in 2025, slowing to 1.7%–1.6% during 2025 2026, mainly due to higher government borrowing costs and aging-related social spending.
Key Takeaway
Both Fitch and S&P continue to see the U.S. economy as strong and creditworthy, supported by its global financial role and deep debt markets. However, rising debt, long-term fiscal challenges, and political uncertainty remain risks that could impact the nation’s financial stability in the future.
