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S&P Maintains AA+ Rating on US, Keeps Stable Outlook
The ratings agency said solid economic growth, steady tax revenues and tariff collections should help stabilise U.S. fiscal deficits over the coming years.
S&P Global Ratings has affirmed a current long-term sovereign credit rating of AA+ to the United States and a stable outlook, based on a resilient economy and expected persistence of elevated fiscal deficit.
The U.S. economy will likely still generate strong significant tax revenues from continued solid economic growth and tariffs, the ratings agency said.
Stable Outlook Despite Fiscal Challenges
S&P’s stable outlook also reflects its expectations for the continuation of economic expansion, credible monetary policy and fiscal deficits that remain high and do not materially worsen.
The agency expects US net general government debt to approach 100% of gross domestic product, over time, driven by rising interest costs and increased government spending linked to an aging population.
S&P also noted ongoing political polarisation, saying it remains difficult to reduce fiscal deficits with bipartisan support even as budget pressures grow.
Rating Risks Remain
Over time, the US net general government debt is expected to reach nearly 100% of gross domestic product amid higher interest costs and a heavier budget burden associated with population aging, the agency added.
S&P also pointed to continued political polarisation, saying after bipartisan support for an effort to cut fiscal deficits “are hard won” even as budget pressure loosens. The three major credit rating agencies currently all have the US on stable outlook with second-highest sovereign ratings
S&P said that its assessment also reflects a greater degree of political polarisation, as well as sharper policy shifts than are typically seen among other high-rated sovereign borrowers.
In 2011 it was the first of the big three credit ratings agencies to downgrade the United States from its AAA rating, citing doubts over fiscal policy and political gridlock.
Source: Yahoo Finance
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