Fitch downgrades U.S. after debt limit stalemate

Fitch Ratings on Tuesday downgraded the U.S. government’s credit rating, after a partisan clash over its borrowing authority threatened default earlier this year.

Fitch lowered the U.S. debt rating to AA+ from AAA. The firm cited repeated debt-limit political standoffs, an inadequate fiscal framework and a complex budgeting process.

The announcement, which Fitch had warned might come for months, triggered an immediate rebuke from Biden administration officials including Treasury Secretary Janet Yellen.

“The change by Fitch Ratings announced today is arbitrary and based on outdated data,” Yellen said.

Fitch’s U.S. downgrade, the second by a major credit agency since 2011, could have lasting consequences for the role of the world’s largest economy in global financial markets. While the U.S. still holds formidable advantages, Fitch on Tuesday warned that the U.S. is increasingly vulnerable to economic shocks.

“It’s not just the debt limit,” James McCormack, Fitch Ratings’ managing director and global head of sovereign and supranational ratings, said in an interview earlier this year. “What we’ve seen in the United States is a steady deterioration in governance.”