The US government’s credit system ranking has been downgraded due to a variety of financial issues that are concerning the nation. One of the major reasons behind the downgrading of the credit rating in the US is its debt burden. 

Fitch is one of the major independent agencies that is known to assess the creditworthiness of a nation. The independent agency has been noted to downgrade the US’s top-rated credit rate from AAA to a lower rate of AA+. 

Fitch has noted that there has been a steady deterioration within the governance over the last 20 years in the United States. Secretary of the US Treasury Janet Yellen has called the down gradation to be arbitrary. This is because the rankings are based on outdated data that belonged within the period of 2018 to 2020.

Generally, investors are considered to make observations of a region’s credit ratings for determining the risk of lending money to the government. On the other hand, the US is considered a highly secure investment region due to the size and reliability of its economy. 

On the contrary, the US saw another round of political brinkmanship over the issue of government borrowing. In June, the US government has been succeeded in lifting the debt of a ceiling worth $31.4 trillion. But this has been lifted through a pre-planned political battle that risked the nation defaulting on its debts. 

When Congress returns from its recess in the summer, US lawmakers will have to work on reaching an agreement on the next year’s budget before the end of September to avoid a shutdown of its government. 

So, it can be stated that the United State’s downgrading its credit rating reflects its expected fiscal deterioration over the coming three years. Along with a high and growing general debt burden on the government.

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