{"id":52220,"date":"2025-08-22T15:38:56","date_gmt":"2025-08-22T19:38:56","guid":{"rendered":"https:\/\/stockmarketwatch.com\/stock-market-news\/fitch-forecasts-slowed-us-economic-growth-and-rising-deficits-affirms-aa-rating-amid-policy-uncertainty\/52220\/"},"modified":"2025-08-22T15:38:56","modified_gmt":"2025-08-22T19:38:56","slug":"fitch-forecasts-slowed-us-economic-growth-and-rising-deficits-affirms-aa-rating-amid-policy-uncertainty","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/fitch-forecasts-slowed-us-economic-growth-and-rising-deficits-affirms-aa-rating-amid-policy-uncertainty\/52220\/","title":{"rendered":"Fitch Forecasts Slowed US Economic Growth and Rising Deficits; Affirms &#8216;AA+&#8217; Rating Amid Policy Uncertainty"},"content":{"rendered":"<h2>Key Takeaways<\/h2>\n<ul>\n<li><strong>Fitch Ratings projects the U.S. economy to grow by only 1.5% in 2026<\/strong>, attributing the slowdown to <em>policy uncertainty<\/em> and <em>higher inflation<\/em> impacting consumer spending and business investment.<\/li>\n<li>The agency warns that the <strong>U.S. has not taken &quot;meaningful action&quot; on its large fiscal deficits<\/strong>, forecasting government deficits to rise to <strong>7.8% of GDP in 2026<\/strong> and <strong>7.9% in 2027<\/strong>, after narrowing to <strong>6.9% in 2025<\/strong>.<\/li>\n<li>Despite these economic concerns, <strong>Fitch affirmed the United States of America&#39;s credit rating at &#39;AA+&#39; with a Stable Outlook<\/strong>.<\/li>\n<li>Separately, Russian President Vladimir Putin expressed optimism about <strong>&quot;the light in the end of the tunnel&quot; for Russia-U.S. relations<\/strong>, noting continued contacts following the Alaska Summit.<\/li>\n<\/ul>\n<p>Fitch Ratings anticipates a significant slowdown in U.S. economic expansion, forecasting growth of just <strong>1.5% in 2026<\/strong>. This subdued outlook is primarily driven by <em>policy uncertainty<\/em> and persistent <em>higher inflation<\/em>, which are expected to continue dampening consumer spending and business investment. The credit rating agency also highlighted other economic risks, including higher tariffs, potential budget cuts, and stricter border rules, all contributing to a challenging economic environment.<\/p>\n<p>The agency issued a stern warning regarding the nation&#39;s fiscal health, stating that the U.S. has not undertaken &quot;meaningful action&quot; to address its substantial government deficits. Fitch projects the general government deficit to narrow slightly to <strong>6.9% of GDP in 2025<\/strong> from 7.7% in 2024, partly due to increased revenues including tariff collections. However, this improvement is expected to be short-lived, with deficits projected to rise to <strong>7.8% of GDP in 2026<\/strong> and further to <strong>7.9% in 2027<\/strong>. Fitch emphasized that without significant mandatory entitlement reform, the medium-term sustainability of public finances remains challenged.<\/p>\n<p>Despite these fiscal and economic concerns, Fitch affirmed the United States of America&#39;s Long-Term Foreign Currency Issuer Default Rating at <strong>&#39;AA+&#39; with a Stable Outlook<\/strong>. This affirmation reflects the country&#39;s large and dynamic economy, coupled with the U.S. dollar&#39;s role as the global reserve currency, which provides exceptional financing flexibility. However, the agency noted that high fiscal deficits and rising government debt levels continue to constrain the rating.<\/p>\n<p>In separate geopolitical news, Russian President Vladimir Putin indicated a glimmer of hope for future Russia-U.S. relations. He stated there is &quot;the light in the end of the tunnel&quot; for bilateral ties. Putin noted that contacts between the two nations are continuing following the recent Alaska Summit, expressing hopes that these initial steps could lead to a full restoration of relations, though he acknowledged this still depends on the West.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways Fitch Ratings projects the U.S. economy to grow by only 1.5% in 2026, attributing the slowdown to policy 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