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the latest factor to prompt worry on Wall Street about U.S. political governance after a near-miss with a partial federal government shutdown this weekend and a debt ceiling crisis earlier this year. ....
Fitch Ratings has downgraded US government credit from AAA to AA+ based on the medium-term fiscal outlook characterised by rising deficits and government debt. The downgrade is a signal that the US needs to get its budgetary process in order ahead of what looks like another political fight this fall, and although the Federal Reserve no longer expects a US downturn, Fitch expects a mild recession in the US in the fourth quarter this year and first quarter of 2024. US debt is predicted to reach 118% of gross domestic product by 2025, three times higher than the median of 39%. ....
Fitch Ratings decision to downgrade US government debt has been seized upon by rival political factions as a new weapon of combat in their never-ending war, and finger pointing has already commenced. Although President Biden has yet to publicly comment on the ratings cut, aides claim he was initially irritated about the news. The House Freedom Caucus, a group of Republican lawmakers, is demanding lower spending levels during the looming shutdown fight, while Bidens team has blamed Donald Trump for the reduction. ....