NEW YORK: S&P Global Ratings has affirmed the United States’ credit rating at AA+, one level below the top rank, citing a resilient economy and high but stable fiscal deficits.
“The US economy’s resilience should support solid fiscal revenue collection, including from continued tariffs, and stabilise fiscal deficits over the next several years,” analysts at S&P led by Lisa Schineller said in a statement.
The analysts said the outlook is stable, backed up by solid economic growth, “credible, effective monetary policy execution”, and fiscal deficits that are high but not rising.
S&P expects US net general debt to approach 100% of gross domestic product, “given structurally rising non-discretionary interest and ageing-related expenditure”.
The analysts also noted that the US’ political parties are far apart and bipartisan cooperation to lower deficits and deal with shrink the budget, “remains elusive”.
On the other hand, they said the parties will continue to resolve the recurring issue of the United States’ debt ceiling, which has been regularly lifted by Congress in recent years, and continue to authorise more borrowing because the consequences of not doing so will be severe on financial markets and the economy.
S&P said a risk remains that the United States’ credit rating could slip over the next two years if deficits grow because lawmakers can’t contain spending or “manage revenue implications from changes in the tax code”.
All three major ratings agencies have the United States pegged one level below AAA with stable outlooks, but S&P said its assessment of the United States is below some of its peers.
The dimmer view takes into account political polarisation “with comparatively sharper swings in policies, particularly under a unified government”, S&P said.
“It also reflects the lesser ability of the United States political class to redress deterioration of the sovereign’s fiscal profile.” — Bloomberg
