Fitch Ratings affirmed the US's 'AA+' credit rating. Reuters
Fitch Ratings affirmed the US's 'AA+' credit rating. Reuters

Fitch says US outlook stable with election unlikely to change fiscal policy



Fitch Ratings on Thursday said the US outlook remains stable and the outcome of the 2024 presidential election will have little effect on Washington's fiscal policies.

The ratings company affirmed the US credit rating as “AA+” due to its structural strength as the world's largest economy, its high per capita income and “tremendous” financial flexibility.

Fitch downgraded the US' once-perfect credit rating last year after a long debt-ceiling battle between the White House and Congress, which drew a furious response from President Joe Biden's administration. The agency also gave the country's rising fiscal deficits as a reason for its decisions.

“The government has failed to meaningfully tackle large fiscal deficits, the growing debt burden and looming increases in spending associated with an ageing population,” Fitch said in a statement on Thursday, noting the US government debt is more than double the "AA" rating medians.

The non-partisan Congressional Budget Office earlier forecast US deficits to total nearly $2 trillion this year. The CBO said if its projection is accurate, then federal debt held by the public could grow up to 122 per cent by the end of 2034.

The US national debt is more than $35 trillion.

Treasury Secretary Janet Yellen told CNBC this year that the US debt load is in a “reasonable place” as long as it remains stabilised relative to the size of the US economy.

Federal Reserve chairman Jerome Powell offered a more sobering take this year, saying US government spending is moving at an unsustainable pace and it would be better for leaders to address it sooner rather than later.

Fitch said the federal government still enjoys financial flexibility because of the role of the US dollar in the world's currency reserves.

It also expects the outcome of the 2024 US election to have little effect on the country's fiscal profile.

“The outcome of the upcoming November 5, 2024 presidential and congressional elections will be important for US economic and fiscal policies,” the ratings agency said.

“However, Fitch believes the underlying fiscal position will remain largely unchanged despite the differing economic objectives, tax policies and spending priorities of Vice President Kamala Harris and former president Donald Trump.”

Fitch said revenue from Mr Trump's across-the-board tariffs proposals would be offset by a full extension of his 2017 tax plan and exemptions to social security.

It said Ms Harris's plans to increase corporate taxes from 21 per cent to 28 per cent would be offset by expanding the child tax credit.

The agency also said the “US standards of governance are also below its 'AA' rated peers”, pointing to political brinkmanship over the 2023 debt-ceiling battle and the threat of government shutdowns in Congress.

The current debt ceiling suspension runs until the end of the year.

Fitch said it believes the new administration will use extraordinary measures and that cash balance will last for a handful of months until the hypothetical date the US runs out of it.

THE DETAILS

Deadpool 2

Dir: David Leitch

Starring: Ryan Reynolds, Josh Brolin, Justin Dennison, Zazie Beetz

Four stars

hall of shame

SUNDERLAND 2002-03

No one has ended a Premier League season quite like Sunderland. They lost each of their final 15 games, taking no points after January. They ended up with 19 in total, sacking managers Peter Reid and Howard Wilkinson and losing 3-1 to Charlton when they scored three own goals in eight minutes.

SUNDERLAND 2005-06

Until Derby came along, Sunderland’s total of 15 points was the Premier League’s record low. They made it until May and their final home game before winning at the Stadium of Light while they lost a joint record 29 of their 38 league games.

HUDDERSFIELD 2018-19

Joined Derby as the only team to be relegated in March. No striker scored until January, while only two players got more assists than goalkeeper Jonas Lossl. The mid-season appointment Jan Siewert was to end his time as Huddersfield manager with a 5.3 per cent win rate.

ASTON VILLA 2015-16

Perhaps the most inexplicably bad season, considering they signed Idrissa Gueye and Adama Traore and still only got 17 points. Villa won their first league game, but none of the next 19. They ended an abominable campaign by taking one point from the last 39 available.

FULHAM 2018-19

Terrible in different ways. Fulham’s total of 26 points is not among the lowest ever but they contrived to get relegated after spending over £100 million (Dh457m) in the transfer market. Much of it went on defenders but they only kept two clean sheets in their first 33 games.

LA LIGA: Sporting Gijon, 13 points in 1997-98.

BUNDESLIGA: Tasmania Berlin, 10 points in 1965-66

COMPANY PROFILE
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Final round

25 under -  Antoine Rozner (FRA)

23 - Francesco Laporta (ITA), Mike Lorenzo-Vera (FRA), Andy Sullivan (ENG), Matt Wallace (ENG)

21 - Grant Forrest (SCO)

20 - Ross Fisher (ENG)

19 - Steven Brown (ENG), Joakim Lagergren (SWE), Niklas Lemke (SWE), Marc Warren (SCO), Bernd Wiesberger (AUT)

Updated: August 29, 2024, 8:16 PM