The downgrade could lead to higher borrowing costs and an overall more burdened economy in the U.S.
Topline
Credit rating agency Fitch announced Tuesday it downgraded the U.S.’s “Long-Term Foreign-Currency Issuer Default Rating” to AA+ from AAA because of expected fiscal deterioration, growing debt and “the erosion of governance” resulting in repeated debt limit standoffs.Key Facts
Credit ratings are designed to signal the health of a nation’s economy and give investors an idea of whether it’s risky to invest there by assessing how likely it is that a country will pay back its debt.
Congress’ June agreement to suspend the debt limit was part of “a steady deterioration in standards of governance over the last 20 years,” according to the Fitch Review, that have “eroded confidence in fiscal management.”
Fitch also said the limited progress in addressing challenges related to Social Security and Medicare costs contributed to the downgrade.
