Fitch Ratings has kept its “AA+” rating on the U.S. sovereign credit rating with a stable outlook Thursday. The agency highlighted the power of the US dollar as the global’s major reserve currency, high per-capita income, and the size of the US economy.
However, despite the wide-ranging headwinds of increased policy uncertainty, increased tariffs, government spending reductions, and increased border restrictions, the US economy has shown to be very resilient. Fitch noted the country’s distinct shock-absorbing and economic flexibility in a tough international environment.
The credit ratings agency did note, however, that job growth has been very weak this year, and labor demand has declined, all of which are tracked by the Bureau of Labor Statistics. Hence, Fitch projects the economy will slow to 1.9% growth in 2026-27, from a forecast of 2.8% in 2025.
One of the main worries of financial analysts is inflation. The Federal Reserve has set a target of 2% inflation, and Fitch anticipates the figure will be 3.4% in 2026. Tariffs have been one of the drivers of core goods inflation, but have not been as strong as originally thought.
In the longer-term forecast, the general government deficit is projected to be much higher at 7.4% of the gross domestic product (GDP) in 2026 and stay at this high level through 2027. This is the largest deficit rating of all “AA”-rated sovereign countries.
Federal spending will keep rising and make it difficult to curb this increasing deficit. As always, the massive burden of national spending for programs such as Medicare and Social Security on the federal budget (besides military costs which are rising at an increasing rate) is a huge strain on the budget.
Federal spending will keep rising and well it may make it hard, to curb this whole increasing deficit. The expansion of military expenditures and the high interest charges on the national debt, still stay major strains on the budget, and meanwhile the swelling of mandatory spending for national programs like Medicare and Social Security are taking a heavy toll too, though.
