Is the U.S. in Downgrade Danger?
The United States and Spain are heading toward potential rating downgrades by Fitch. The credit ratings firm said Tuesday that the U.S. faces a “material risk” of losing its triple-A status if the August 2011 debt ceiling crisis is repeated, and Spain will continue to face risks of a downgrade even if a bailout is avoided, Reuters reported.
Congress’s resolution of the tax hikes and spending cuts known as the fiscal cliff at the end of December did little to convince Fitch’s head of sovereign ratings, David Riley, that the pressure on the country’s rating was decreasing. He warned that another debt ceiling dispute would weaken confidence in Washington.
“That uncertainty over economic and fiscal policy is something that is not typically characteristic of triple-A, and more substantively we think it is weighing on the prospects for growth and the recovery,” Riley told the publication.
There is now a “material risk” that United States will lose its triple-A rating…