In the statement by Fitch, it was noted that the downgrade of the U.S. rating reflects the expected fiscal deterioration over the next three years, high and growing general government debt burden, and governance erosion compared to peer ratings with last-minute decisions highlighted by the recurring debt limit impasses.
According to the announcement, the credit rating agency downgraded the long-term credit rating of the United States from "AAA" to "AA+" and changed the outlook from negative to stable.
U.S. Treasury Secretary Janet Yellen stated in a written statement regarding the decision that she strongly disagrees with Fitch's decision.
Yellen claimed that the decision is "arbitrary and based on outdated data," and mentioned that despite the progress made by the U.S. in many of the indicators used by Fitch as the basis for the rating change, the agency announced the rating change now.
Yellen used the phrase, "Fitch's decision does not change what Americans, investors, and people around the world already know."
Pointing out the rapid economic recovery of the U.S. economy in recent years, Yellen reminded that the unemployment rate is close to historic lows, inflation has significantly decreased since last summer, and the U.S. economy continues to grow.
This marks the first time in 12 years that the U.S. credit rating has been downgraded. Previously, in 2011, during a similar debt-ceiling debate, another credit rating agency, Standard & Poor's, downgraded the U.S. credit rating.
At that time, the downgrade had significant effects on the markets, leading to sharp declines in the stock market and increased bond yields.
