Last Tuesday, Fitch Ratings downgraded the US government’s credit rating from AAA to AA+, NBC News reported.
In a statement on Tuesday, the rating agency cited the “steady deterioration in standards of governance” in the US, particularly on debt and fiscal matters, “over the last 20 years.”
Pointing to the recent battle over the debt ceiling, Fitch said the US has experienced an “erosion of governance.”
In response to the move, Treasury Secretary Janet Yellen said in a statement that she disagreed with Fitch’s decision, arguing that the downgrade is “based on outdated data” and “arbitrary.”
Yellen said the rating change does not alter what investors worldwide “already know,” primarily that Treasury securities are still “the world’s pre-eminent safe and liquid asset” and the US economy remains “fundamentally strong.”
According to ABC News, some analysts downplayed the effect the rating change will have on the economy but said it is a significant milestone that could increase the country’s borrowing costs while threatening economic growth and further increasing interest rates.
During last Wednesday’s “Varney & Co.” on Fox Business, co-host Brian Brenberg spoke with New Yorkers in Fox Square about the credit downgrade.
One New Yorker named Al told Brenberg that the US is “losing our standing in the world.” He said when the government wants to spend money it doesn’t have, it decides to “just print more money.”
A New Yorker named Gene said the credit downgrade isn’t “overly” concerning, but added that it doesn’t instill confidence in the US economy. Gene also blasted so-called “Bidenomics,” saying Biden’s economic plan has never worked.
Gene suggested that the credit downgrade is “just another straw in the haystack” that is pushing the US economy into a “downward spiral” and Americans “are feeling the strain.”
Fitch Ratings is one of three credit rating agencies that evaluate a country or company’s ability to meet its debt obligations.