Fitch Holds US Credit Rating at AA+ With Stable Outlook
Fitch affirmed the US at AA+ but cut its growth forecast and flagged rising entitlement costs and shutdown risks as long-term fiscal threats.
Fitch Ratings affirmed the United States' sovereign credit rating at AA+ Thursday, keeping the outlook stable while delivering a cautionary assessment of where the world's largest economy is headed. The rating agency slashed its US growth forecast to 1.9% for both 2026 and 2027, down sharply from the 2.8% pace recorded in 2025, and flagged a noticeably weakening labor market as a central driver of that deceleration.
The affirmation effectively removes any near-term downgrade risk from the table, but Fitch's accompanying commentary reads more as a warning than a green light. The agency said it does not expect inflation to return to target until the end of 2028, a more patient timeline than some Federal Reserve officials currently project, adding another data point to arguments for slower Fed rate action this year.
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Fitch identified two structural threats it says are constraining the rating. First, Washington's chronic political dysfunction — including the rising risk of government shutdowns and prolonged legislative gridlock — could deepen fiscal instability. Second, entitlement spending on Medicare and Social Security is projected to expand by nearly one percentage point of GDP by 2032, compounding already high deficits, a heavy interest burden, and a rising national debt load.
At the same time, Fitch reaffirmed the core pillars holding the rating in place: the sheer scale of US economic output, elevated per capita income, a dynamic private sector, and what the agency called exceptional financing flexibility — a nod to the dollar's reserve currency status and the unmatched depth of Treasury markets. Those structural advantages are keeping the US at AA+ even as the fiscal picture darkens.
Because Fitch already downgraded the US from AAA to AA+ in 2023, markets had largely absorbed this fiscal narrative, and analysts expect Thursday's decision to produce only a muted reaction across Treasuries and equities. Continue reading at Forexlive.
