Fitch Repeats Warning of U.S. Downgrade in 2013, Reuters Says
The U.S. lacks a credible plan to reduce spending and stop the growth of the national debt, Edward Parker, a sovereign analyst, said at the firm’s Global Banking Conference in New York, according to Reuters. The comments were consistent with the third-biggest ratings firm’s statements in November, when it assigned a negative outlook to the U.S. and said the probability of a downgrade is greater than 50 percent over two years.
Standard & Poor’s, the world’s largest ratings company, downgraded the U.S. to AA+ in August, saying lawmakers had failed to agree on enough budget cuts. Moody’s Investors Service, the second-largest, has had a negative outlook on the country’s Aaa rating since August.
Fitch’s analysts didn’t announce any changes to their views at the conference, Brian Bertsch, a spokesman in New York, said in an e-mail.
Fitch forecasts federal public debt will exceed 90 percent of gross domestic product by the end of the decade unless the government addresses rising health and social security spending through tax increases or reductions in expenditures.
The “high and rising federal and general government debt burden is not consistent with the U.S. retaining its AAA status even with its other fundamental sovereign credit strengths,” Fitch said Dec. 21 in a statement.
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