Aug 2, 2023, 10:08am EDT
North America

What to make of Fitch’s surprise move to downgrade the US’s rating

Four thousand U.S. dollars are counted out by a banker counting currency at a bank in Westminster, Colorado November 3, 2009. REUTERS/Rick Wilking/File Photo
REUTERS/Rick Wilkin

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The News

Fitch Ratings downgraded the U.S.‘s credit rating in a surprise move Tuesday, citing the country’s fiscal deterioration and government standoffs over the debt ceiling.

The downgrade sent global markets tumbling Wednesday morning. We’ve curated reporting and insights from experts on what they make of Fitch’s decision.

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  • While the U.S. stock markets “ignored the downgrade,” it was “bad news” for Asian markets which tanked, the Indian Express reported. The Sensex in India fell by over 1%, while stock markets in Hong Kong, Tokyo, Australia, Korea, and other Asian markets fell by up to 2%. “The US is the largest economy in the world and the performance of other economies depends to some extent on the US,” journalist George Matthews wrote.
  • Fitch Ratings’ decision to downgrade is “bizarre and inept” given the current better-than-expected economic situation in the U.S. despite the “long-run fiscal challenges,” Lawrence H. Summers, secretary of the treasury under former President Bill Clinton, tweeted.
  • In “a more normal time,” Republicans and Democrats might have united to ”blast Fitch" for the sudden downgrade, Tony Romm, economic policy and accountability reporter for the Washington Post, wrote on Twitter. “Instead, they attacked each other, which is maybe sorta making... fitch’s point about political dysfunction around spending.”
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Know More

With the U.S. slipping to an AA+ rating, just ten economies have the top debt rating. Australia, Denmark, Germany, Luxembourg, Netherlands, Norway, Singapore, Sweden, and Switzerland are all classified as AAA.

Canada is rated AAA by Standard and Poor and Moody’s, but AA+ by Fitch.