On Friday, the New York-based American credit rating agency Fitch, often contemplated as one of the “big three” sovereign credit rating agencies alongside S&P and Moody’s, had slashed the credit rating outlook for its US Government to “negative” from a prior “stable” citing an accelerating budget deficit, however, the global rating agency had kept the world’s No.
1 economy’s overall credit rating unchanged at “AAA”. In point of fact, latest slash in credit rating outlook for the US Government came forth days after the country had stomached a series of slanderous economic data including a GDP contraction of record 32.9 per cent over the second quarter of the year alongside an upsurge in initial jobless claims after fourteenth straight week of decline, however, a rebound in consumer spending solaced the optimists.
Fitch move reflects likely future changes in overall US credit rating, suggest analysts
Aside from that, following its Friday announcement to downgrade United States’ credit rating outlook to negative what Wall St.
analysts translated as a transmutation ahead of possible further downgrading in the overall rating in a near-term outlook, the New York-based credit rating agency was quoted saying in a statement that the downgraded outlook suggested a soaring budget deficit alongside “an absence of a credible fiscal consolidation plan” to control the deficits.
On top of that, the Congressional Budget Office was quoted saying in a statement later last month that the projected budget deficit for the current fiscal year that will end on September 30, would likely to hit an all-time high of $3.7 trillion on record, nearly four-fold of an already record budget deficit of $984.4 billion registered last year.
Besides, adding that the US budget deficits have been surging vigorously this year mostly due to a historic $3 trillion pandemic relief bill aimed at cushioning the fiscal fallouts of ongoing global pandemic outbreak, the Fitch report published late on Friday said, “There is a growing risk that U.S.
policymakers will not consolidate public finances sufficiently to stabilize public debt after the pandemic has passed”.