The rating was cut Tuesday one notch to AA+ from AAA, the highest possible rating. The new rating is still well into investment grade.
It’s only the second time in the nation’s history that its credit rating has been cut. In 2011, the ratings agency Standard & Poor’s stripped the U.S. of its prize AAA rating after a prolonged fight over the government’s borrowing limit. The Government Accountability Office, in a 2012 report, estimated that the 2011 budget standoff raised Treasury’s borrowing costs by $1.3 billion that year.
At the same time, the huge size of the U.S. economy and historic stability of the federal government has kept its borrowing costs low. Global investors often flock to U.S. Treasury securities during periods of economic turmoil, lowering the interest rate paid by the U.S. government.
Embarrassing, but fully deserved. Thanks, Kevin.
This is the best summary I could come up with:
The Government Accountability Office, in a 2012 report, estimated that the 2011 budget standoff raised Treasury’s borrowing costs by .3 billion that year.
Global investors often flock to U.S. Treasury securities during periods of economic turmoil, lowering the interest rate paid by the U.S. government.
It said U.S. governance has declined relative to other highly rated countries and it noted “repeated debt limit standoffs and last-minute resolutions.”
Fitch produced a report last year that showed government stability declined from 2018 to 2021, but increased since Biden assumed the presidency, said the person, who was granted anonymity to disclose private conversations.
Economists at the Federal Reserve made a similar forecast this spring but then reversed it in July and said growth would slow but a recession would likely be avoided.
I am downgrading Fitch citing that they suck
The debt has become a political bargaining chip in the US. I’m amazed we are rated as high as we are…
Having a credit rating on the imaginary debt of the US is ridiculous.
The federal govt doesn’t borrow US dollars - it creates US dollars.
It’s impossible to default.
It’s not impossible to default. It should be, but it isn’t due to “debt ceiling” nonsense. Political instability is the cited reason for the downgrade and, yeah, makes perfect sense why that would be.
no, I guess it’s not entirely impossible. But it’s so far disconnected from political realities that the downgrade still makes no sense. Even with political instability.
The GOP’s owners are the ones deep in the financial system who would be harmed the most. They’ll never go through, the whole govt debt ceiling thing is their charade.
The Democrats owners are almost in as deep, and they have nothing to gain by the charade.
There might be political instability about lots of other topics, but there isn’t actually any about not making bond payments and blowing up the financial industry.
“U.S. Credit Rating Downgraded: How Will It Impact Your Investments?”
