Fitch has cited concerns over the country's high and growing debt, its unresolved fiscal issues, and an incoming recession.
While the decision comes after the Biden administration managed to resolve the debt ceiling crisis and inflation has now consistently been coming down for months, the international credit rating agency cited specific concerns it has over the future of the U.S. economy, the country's growing debt, and an incoming recession.
According to the company, despite the fact that the debt ceiling standoff was resolved two months ago,"the repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management." "The government lacks a medium-term fiscal framework, unlike most peers, and has a complex budgeting process," Fitch wrote.
Fitch expects that the U.S. economy will slip into a mild recession in the last quarter of the year and the first quarter of 2024, with the country's annual GDP growth slowing to 1.2 percent this year from 2.1 percent in 2022. Next year, it expects a growth of just 0.5 percent.
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