Fitch Ratings affirmed the United States’ long-term sovereign credit rating at AA+ with a stable outlook. The decision came on August 13. Markets barely flinched.
Yet the numbers tell a different story. One that stretches far beyond any single announcement. The U.S. now carries general government debt equal to 117 percent of GDP at the end of 2025. Fitch sees that ratio climbing to 123 percent by the close of 2028. And 128 percent by 2030 under current policies. Investing.com laid out the projections in detail.
Compare that with the median for other AA-rated sovereigns. Just 46.3 percent. The gap stands out. So does the deficit picture. Fitch expects the general government deficit to widen to 7.4 percent of GDP in 2026. It stays there in 2027. That marks the highest level among peers in the category.
The rating agency pointed to familiar strengths. A large economy. High per-capita income. A dynamic business environment. And above all the dollar’s dominant place in global finance. It holds 58 percent of official reserves. It features in 89 percent of over-the-counter foreign-exchange operations. Foreign ownership of U.S. Treasuries has held steady near 30 percent for five years. These factors give Washington unmatched financing flexibility.
But. The fiscal math keeps deteriorating. Interest payments as a share of revenue will reach 12.6 percent by 2028. The median for AA peers sits at 3.5 percent. The debt ceiling of $41.1 trillion looms for mid-2027. Treasury cash balances currently stand at $967 billion. Nothing suggests an easy resolution when the limit arrives.
Growth is slowing too. Fitch forecasts real GDP expansion of 1.9 percent for both 2026 and 2027. That follows 2.8 percent in 2025. Higher tariffs, government spending cuts, tighter border controls and policy uncertainty all weigh on the outlook. Labor demand has already softened. Job creation dropped sharply this year.
Inflation adds another layer. The Federal Reserve’s preferred personal consumption expenditures measure hit 3.7 percent in June. Core stood at 3.3 percent. Fitch sees headline inflation averaging 3.4 percent in 2026. That exceeds the 2.9 percent median for AA countries. The agency still expects it to approach the Fed’s 2 percent target by the end of 2028.
This affirmation follows a clear pattern. Fitch first cut the U.S. one notch from AAA in 2023. It cited repeated debt-ceiling standoffs and the lack of a credible fiscal consolidation plan. The stable outlook since then reflects an economy that has absorbed shocks without breaking. Reuters reported the latest move and noted S&P Global Ratings affirmed its own AA+ rating with a stable outlook in June.
Moody’s Ratings took its own step in May 2025. It lowered the U.S. to Aa1 from Aaa. The Peter G. Peterson Foundation captured the significance. “Three successive downgrades of the U.S. credit rating should alarm our elected leaders,” the organization wrote. “For decades, the United States has benefited significantly from the dollar serving as the world’s primary reserve currency. Unless we change course and improve our fiscal condition, we may put that position at risk.” That March 2026 analysis put gross federal debt near $39 trillion and noted it was rising by $1 trillion every five months. Peter G. Peterson Foundation.
Earlier this year Fitch had already flagged the risks. In an April report the agency warned that structurally large fiscal deficits would keep the U.S. debt burden far above other AA peers. Tax cuts in the One Big Beautiful Bill Act would drive further widening this year. Tariff revenue offered only partial offset. Bloomberg covered those warnings.
Political crosscurrents complicate any fix. President Trump has tested institutional boundaries since taking office in January 2025. Courts blocked several moves, including broad use of the International Emergency Economic Powers Act for tariffs and attempts to remove Federal Reserve board members. Midterm elections in November are expected to deliver a slim Democratic majority in the House while Republicans hold the Senate. Divided government often produces more spending and higher deficits. History supports that view.
Still the U.S. retains advantages few nations can match. Its economy proved resilient through tariffs, spending adjustments and global uncertainty. The dollar’s reserve status acts as a shock absorber. Investors continue to buy Treasuries even as debt piles up. That demand keeps borrowing costs lower than fundamentals alone would suggest.
Yet the trajectory raises questions. Net interest costs reached $970 billion last year. The Congressional Budget Office sees them averaging $1.6 trillion annually over the next decade if rates stay elevated. Higher rates feed higher debt. The feedback loop worries analysts across the rating agencies.
Market reaction to Thursday’s announcement stayed muted. Treasury yields moved little. Equity indexes held steady. Participants have heard similar language before. The stable outlook signals no near-term downgrade. But it also signals no improvement in the underlying fiscal position.
Fitch expects the debt ceiling debate to return in mid-2027. By then the political calendar will have shifted again. Any agreement will likely kick the can further down the road. Markets have priced in that outcome for years. The real test may come when investors finally demand higher premiums for holding ever-larger amounts of U.S. debt.
For now the rating stands. The economy grows. The dollar reigns. And the debt climbs. Each new affirmation buys time. How much time remains the open question.