Fitch Ratings has affirmed the United States' long-term sovereign credit rating at AA+ with a stable outlook, citing the country's economic resilience and the dollar's status as the world's leading reserve currency. According to reports from Reuters, the agency highlighted the US economy's ability to absorb shocks and its flexibility, which continued to support its credit profile despite higher tariffs, government spending cuts, tighter border controls and increased policy uncertainty. The rating decision follows S&P Global's move in June to maintain its AA+ rating on the United States, citing the resilience of the economy and strength of its institutions. The dollar holds a 58% share of global reserves and accounts for 89% of over-the-counter operations, providing exceptional financing flexibility that underpins the rating despite the softer economic outlook. As reported by Reuters, the U.S. economy remained resilient despite these challenges, reflecting its shock-absorption capacity and economic flexibility.
Fitch expects US economic growth to moderate to 1.9% in both 2026 and 2027, down from 2.8% in 2025, with the agency noting weakening labor demand and a significant slowdown in job creation this year. As reported by Reuters, inflation remains a key concern, with Fitch expecting consumer price inflation to average 3.4% in 2026, well above the Federal Reserve's 2% target. The agency expects inflation will not reach the Federal Reserve's 2% target until the end of 2028, with tariffs continuing to add to core goods inflation, though their impact has been less severe than initially anticipated. According to Reuters, Fitch noted that labor demand has weakened this year, with the pace of job creation slowing significantly. Despite the softer outlook, Fitch noted that the rating remains underpinned by the scale of the US economy, high per-capita income, a dynamic business environment and what it called exceptional financing flexibility.
The fiscal outlook remains a major weakness for the US credit profile, with Fitch forecasting the general government deficit will widen to 7.4% of GDP in 2026 and remain at that level in 2027, the highest among 'AA'-rated sovereigns. According to Reuters, general government debt-to-GDP is expected to rise to 123% by the end of 2028 from 117% at the end of 2025, more than double the AA median of 46.3%. Higher military spending and interest costs, along with rising spending on Medicare and Social Security, are expected to constrain efforts to reduce the deficit. The agency highlighted the growing burden of entitlement spending, projecting that Medicare and Social Security costs will expand by nearly one percentage point of GDP by 2032 as the population ages. Fitch warned that government shutdowns may become more likely and more protracted, a risk that has repeatedly rattled markets. As reported by Reuters, higher military and interest costs, along with rising Medicare and Social Security spending, would limit efforts to reduce the deficit.
The dual impact of tariff policy on both fiscal accounts and the broader economy has become a focal point for markets. Market data indicate that U.S. government tariff revenues are expected to surge from $77 billion in 2024 to $250 billion in 2025, providing a degree of near-term fiscal relief. However, the IMF warns that tariff policy is expected to exert a negative supply shock on the U.S. economy, potentially reducing U.S. economic activity levels by approximately 0.4% by 2027. Despite heavy fiscal pressures, the U.S. dollar's central role in the global financial system remains a critical pillar of U.S. creditworthiness. Fitch has previously noted that the dollar accounts for roughly 58% of global foreign exchange reserves, and expects the dollar's dominance in international trade and financial markets to persist even amid policy uncertainty. Market participants suggest that while Fitch's decision to maintain the AA+ rating was not unexpected, the warnings about slowing growth and persistently high deficits underscore the long-term tug-of-war facing U.S. sovereign credit between economic resilience as support and fiscal deterioration as pressure.
Fitch's decision follows the agency's downgrade of the US sovereign rating by one notch from the top-tier AAA level in 2023, citing an expected deterioration in public finances and repeated confrontations over raising the federal debt ceiling. In May 2025, Moody's also cut the U.S. rating by one notch, citing rising government debt and removing the country's last remaining triple-A sovereign rating. The current AA+ rating reflects the agency's assessment of the US economy's large and diversified nature, high per-capita income, and the dollar's reserve-currency status, despite ongoing fiscal and inflation challenges. When S&P Global affirmed the U.S. AA+ rating and stable outlook in June, it cited U.S. economic resilience and strong fiscal revenues as supportive factors, and projected annual U.S. economic growth of approximately 2% from 2026 to 2029. The three major rating agencies currently assign the following ratings to the United States: Fitch and S&P Global both maintain AA+, while Moody's assigns Aa1. Fitch's actions tend to draw outsized attention relative to its market share, largely because of precedent: its 2023 downgrade of the US from AAA to AA+ was a genuine market event, given Moody's was the last to hold the US at the top tier until 2025 and S&P had already downgraded back in 2011. Within the 'Big Three' credit rating agencies, Fitch is usually seen as the smallest by market share, with S&P and Moody's regarded as the more dominant pair.
