In a glaring sign of the abject failure of “Bidenomics,” the U.S. had its credit rating downgraded on Tuesday for only the second time in the nation’s history.
Fitch Ratings, one of three powerful credit agencies, lowered the U.S.’s Long-Term Foreign-Currency Issuer Default Rating from the sterling “AAA” down to “AA+.” Standard & Poor’s slashed the nation’s credit rating in 2011 during the Obama administration.
Imagine the media reaction if the announcement had been made while former President Donald Trump was in the Oval Office.
This action may lead to even higher interest rates at a time when the Federal Reserve has instituted an unprecedented series of hikes. These were enacted in a desperate attempt to stem President Joe Biden’s runaway inflation.
Washington barely averted a default on its obligations earlier this year as the political parties were able to reach an 11th hour agreement on the debt ceiling.
BIDENOMICS: The United States credit rating has been downgraded from a AAA rating as US debt continues to skyrocket.
"Fitch has downgraded the U.S. credit rating to AA+ from AAA.”
In an attempt to help shield Biden from criticism, Fitch is trying to blame January 6th for the… pic.twitter.com/owfnYYoXCe
— Collin Rugg (@CollinRugg) August 2, 2023
The same possibility looms for 2024 if a spending agreement is not reached.
In a statement, Fitch said its downgrade reflects an “expected financial deterioration” over the next three years. It was also influenced by the exploding national debt and a pattern of debt limit standoffs.
The U.S. was first placed on the “negative” watch list in May. Fitch noted that the nation has endured a steady deterioration in “standards of governance” over the past two decades, particularly concerning its financial situation.
The mainstream media predictably did not erupt in shock, though the White House reacted angrily. Treasury Secretary Janet Yellen released a statement calling the move “arbitrary and based on outdated data.”
The administration declared it “strongly disagrees with this decision.” And White House press secretary Karine Jean-Pierre said, “It defies reality to downgrade the United States at a moment when President Biden has delivered the strongest recovery of any major economy in the world.”
Fitch did not concur, saying that confidence has faded in the country’s management of its finances.
Experts disagreed on the impact on financial markets. Keith Lerner of Truist Advisory Services warned that the market is uncertain and “at a point where it’s somewhat vulnerable to bad news.”
However, Albion Financial Group’s Jason Ware predicted that few investors, especially those with a long-term strategy, will sell due to Fitch lowering the rating from AAA to AA+.