Fitch Ratings cited a, ‘steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters,’ as the main reason|SolvencyIIWire|CC BY 2.0
Fitch Ratings, one of the three major credit ratings agencies in the world, downgraded the U.S. rating from AAA to AA+ on Tuesday, further fueling worries about the economy.
The agency says the downgrade happened because the government is spending more than it’s earning and getting involved in political disputes that make it difficult to repay debts.
Why
Fitch cited a “steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters,” as the main reason. The lower rating comes months after Congress voted to suspend the $31.4 trillion debt ceiling until 2025.
Treasury Secretary Janet Yellen strongly disagreed with the downgrade calling it, “arbitrary and based on outdated data.”
Stock futures opened low in after-hours trading yesterday giving a glimpse of investor jitters.
Did you know
The last time the country lost a rating was during another debt ceiling standoff in 2011 when Standard & Poor’s did a similar cut. Right now, Moody's Investors Service is the only agency to hold America at a AAA rating.