Fitch Downgrades U.S. Long-Term Credit Ratings from ‘AAA’ to ‘AA+’

Fitch announced Tuesday it has officially downgraded the United States’ long-term foreign-currency issuer default rating to “AA+” from “AAA,” saying the downgrade “reflects the expected fiscal deterioration” and the nation’s heavy debt burden.

The ratings agency pointed the America’s “erosion of governance,” rising deficits, and tightening by the Federal Reserve. It also said its expects the U.S. economy to slip into a mild recession in the fourth quarter.

Investors use credit ratings to assess the risk profile of companies and governments when they raise financing in the debt capital markets. Generally, the lower a borrower’s rating, the higher its financing costs.

The agency also said it expects the US federal deficit to grow from 3.7% of GDP in 2022, to 6.3% of GDP in 2023.