US still AAA nation, says credit-rater Fitch

The United States is still a solid AAA country in the eyes of FitchRatings, as the credit rating agency affirmed the nation’s top rating Tuesday.

Notably, the rater also assigned a stable outlook on that rating over the long term, setting itself apart as relatively optimistic about the nation’s overall fiscal picture.

{mosads}However, it did offer its own warnings to the freshly minted
congressional “supercommittee.” It warned that if the group of 12
lawmakers fail to find at least $1.2 trillion in deficit cuts as charged
by their mandate, or if the nation’s economy falters more than
expected, the AAA rating could be given a negative outlook. Such a
designation would mean Fitch would be likely to downgrade the nation’s
rating within two years.

It noted that while its economy beats all its peers, the nation’s fiscal
picture is also worse than most of its fellow AAA-rated nations. Fitch
said America’s fiscal health has “deteriorated sharply.”

But for now, Fitch said, key aspects of the nation’s “exceptional creditworthiness” remain intact, despite the recent drama over raising the debt limit. Fitch argued that America enjoys a pivotal role in the global financial system, as well as a “flexible, diversified and wealthy” economy.

“The U.S. economy remains one of the most productive in the world,” the agency said.

But the continued role of Treasury bonds as the security standard for markets give the U.S. “unparalleled financing flexibility and enhanced debt tolerance.” And the deal to raise the debt limit, if implemented as designed, would bring the nation “materially closer to a sustainable path.”

Fitch’s actions came after the unprecedented downgrade of the nation’s credit rating by Standard & Poor’s, as it argued that heightened political drama has brought into question the ability of the nation to tackle the broad issues it faces. Both Fitch and Moody’s are keeping the nation at AAA for the time being.

But Fitch has emerged as the rosiest rater when it comes to the United States, as Moody’s has placed the nation’s top rating on negative outlook, and has warned it could downgrade within the year if lawmakers punt on tackling the deficit and debt.

On the day Congress approved the deal to raise the debt limit, Fitch issued a statement calling it “an important first step” in getting the nation’s finances in order.

“Despite the intensity and theatre of political discourse in the United States, there is the political will and capacity to ultimately do the right thing,” the agency said in a statement. “The fundamental economic and financial underpinning of the United States’ ‘AAA’ status remains strong despite the heated political debate over the role of government and how best to reduce the outsized federal budget deficit.”